Sunday, November 5, 2017

Don Quijones — Spain Just Lit a Fuse Under Catalonia — its Richest Region

But while jailing Catalonia’s elected government may be justifiable by Spanish law and will probably go some way to placating the more revanchist elements of the Spanish public, it will also further inflame tensions and polarize divisions within Spain’s north eastern region while doing yet more damage to the tattered image of Spanish democracy in the rest of the world. It also risks exacerbating economic uncertainty and instability in Catalonia, Spain’s richest region.
Just when things appeared to be returning to some semblance of normality as local people and the region’s political parties turned their attention to the regional elections scheduled for December 21, Rajoy, his government, and the judges they help appoint just lit a fuse under the region.…
Spain’s central bank yesterday warned that the current crisis could, in the worst case scenario, end up shaving 2.5 percentage points off Spain’s GDP in the next two years....
In short, Spain’s economy is perhaps not as robust as recent growth figures may suggest. Unemployment, already at 17.1%, surged by 58,000 in October as the number of highly seasonal tourist-dependent jobs began shrinking. Market-entry salaries are 14% lower than they were in 2008.
Worse still, the economy’s recent show of strength was based on three main pillars: consistently low global energy prices, the large-scale diversion of tourists from geopolitical hot spots like Turkey and Egypt, and dirt cheap public debt resulting from Mario Draghi’s massive binge-buying of euro zone sovereign bonds. And all of these pillars are beginning to show signs of strain. As tensions continue to rise in Catalonia, the economic uncertainty digs in for the long haul.
Shades of the civil war that brought fascist Franco to power? Is history rhyming?

Wolf Street
Spain Just Lit a Fuse Under Catalonia — its Richest Region
Don Quijones

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