“Grave pérdida de la competitividad” [ .. ] “En España, la deterioración solo está empezando…”

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[ .. ] The picture is darkening so fast in Spain…
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Bernard Connolly, global strategist at Banque AIG, said the eurozone faces possible disintegration unless there is a fiscal bail-out from Germany that matches – in sheer scale – Berlin’s Versailles reparations payments after the First World War. “The bursting of the EMU credit bubble seems imminent, and will reveal current account imbalances among euro area countries as extremely dangerous. The medium-term feasibility of the euro area in its current form must be open to very considerable doubt,” he said.
Spain needs a devaluation of 30pc and Greece needs 40pc to restore balance to their economies after suffering a major loss of unit labour competitiveness. The current account deficit is 10pc of GDP in Spain, and 14pc in Greece.
Mr Connolly said the combination of collapsing demand in southern Europe and a slide in the external value of the euro now means that the EMU bloc may now start to export the effects of its troubles to the rest of the world, making it harder to bring the credit crisis to an end.
“A momentous economic slowdown is now under way. We believe the deterioration in Spain is just in the beginning stages,” said a report by Morgan Stanley. [Telegraph, 15 agosto 08. Spain in crisis as Europe crumbles].

● España debe cambiar de modelo económico.
● Economía en este Infierno.