Wednesday, April 15, 2009

Spain's Central Bank Says No Room Left for New Stimulus

Spain's central bank issued a stark warning to the country's government Wednesday, saying there is no more room to revive the economy with fresh spending.

In an interview, the Bank of Spain's chief economist, Jose Luis Malo de Molina, also cautioned that any additional fiscal stimulus would have scant effect on the economy and require big spending cuts down the road to right the country's finances.

The margin for new spending or tax cuts is "nonexistent" unless new measures to cut the budget deficit in the medium term are taken, Mr. Malo de Molina said. Failing that, "we will find ourselves in a situation where we have to apply restrictive measures when the economy is still in a phase of contraction," further deepening the slump.

He neglects to explain or even mention that Spain is no longer a sovereign, currency issuing nation, so it does not have the ability to deficit spend without limit. Spain and other Eurozone member states are all functionally like a states within the United States. If they're strapped for cash, they're strapped for cash. They can't credit bank accounts like the Federal Gov't can.

Read article here.


googleheim said...

hi mike

here i explain Mr. Cavuoto's name meaning :

Origin : italian
Meaning :
a. CAV - from the latin for cavitation
b. VUOTO - from italian for vacuum

The American system is set up to be supportive of the equal playing field noted from the very beginnings like Alexander de Toqueville.

The destructive Republican't and debt terrorists tax dodging ways reflect their desire for ellimination of such a supportive role.

It's ironic what Cavuoto calls "socialism" in that it is what supports the capital system and promotes the general welfare.

However, his own penchant and leaning is predicated towards a form of socialism known as fascism.

So question: when he nonchalantly jokes of these things that translate into real effects on the common person as socialism, he inextricably links himself to the opposite side of his finger wagging to that of the false nationalism like that of fascist aristocracies who do NOT support the recurring wealth cycle that is available to everyone to take part as conceived by the founding fathers of the USA.

Anonymous said...

Re: 'Bank of Spain projects the level of public debt to rise sharply from 39% of GDP in 2008 to 60% in 2010'
If the deficit spending can create demand that will promote jobs then the GDP would increase.
Is it even possible to increase GDP on a micro level?
Measuring GDP seems senseless, doesn't it?