Spain’s gaping economic crisis has pushed stock markets down this week triggering a fresh wave of doubt concerning the Eurozone’s progress and recovery.
The Washington Post explains that Spain’s unemployment rate, currently higher than that of the U.S. during the Great Depression, has contributed to the economy’s downfall.
“Spain announced that its economy shrank by 0.4% in the second quarter of 2012 and that it would remain in recession until 2013. The country’s borrowing costs soared to all-time euro-era highs as uncertainty about the finances of its banks and regional governments gripped investors,” the paper explained.
It continues, “The new bout of doubt about Europe’s financial stability sent investors fleeing to the safety of U.S. Treasuries and German government bonds, driving already low rates even lower. In Germany, the yield on two-year government bonds was slightly negative for the 12th consecutive day, meaning people were effectively paying the German government to keep their money safe for that period.”
Experts agree that European leaders may be able to stave off major crises for a short while, but that a new intervention by the European Central Bank is inevitable. The fate of the Eurozone, they say, is a political issue, and not just a financial one.
Spain’s struggles are likely to have a much greater impact than Greece’s; Greece’s economy is the size of Maryland’s, while Spain’s is the 12th largest in the world, according to the Washington Post.
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