Edward Hugh has another great article on the state of the euro, the Spanish economy, and what the future might hold for the region. Key graph:
Whatever way you call the aid Spain is now receiving from Europe it is clear that this is the beginning and not the end of what is likely to be a long process, one which will now inexorably lead to either the creation of a United States of the Euro Area, or to failure and disintegration of the Euro. There will be no middle path, so the stakes are now very high for all involved. Unfortunately Europe’s leaders are still too busy thinking short term, and practicing one step at a time-ism.
Housing prices, after putting up a fight for a while, are really in freefall now, plunging 13% last year alone — that’s the fastest rate since the economic crisis began five years ago. And since the housing bubble is the key part of the crisis in Spain, the plunge in prices (down 30% from the peak and no bottom in sight) means at last real decisions will have to be made.
It’s still amazing to me, though, how little has changed in daily life for most people here, despite the massive amounts of pain the economy is going through.