(ANSAmed) - MADRID - "Yet again the economy slides, unemployment soars, banks get into trouble, governments rush to the rescue - but somehow it's only the banks that get rescued, not the unemployed." "There's nothing necessarily wrong with this latest bailout (although a lot depends on the details). What's striking, is that even as European leaders were putting together this rescue, they were signaling strongly that they have no intention of changing the policies that have left almost a quarter of Spain's workers - and more than half its young people - jobless. By any of the usual rules of monetary policy, the situation calls for aggressive rate cuts. But the central bank won't move." The economist heavily criticises the eurozone's paralysis and concludes: ''it's becoming increasingly clear that it will take utter catastrophe to get any real policy action that goes beyond bank bailouts. But don't despair: at the rate things are going, especially in Europe, utter catastrophe may be just around the corner." (ANSAmed) - NEW YORK - The eurozone crisis worrying the United States. The White house has welcomed the bailout of Spanish banks and the support the EU has promised to Madrid. But despite these interventions, concern is rising over the possibility of the crisis spreading to Italy. And of a leader who is considered to be credible and capable, Italian Premier Mario Monti, having to throw in the towel. Will Italy be the next to fall?, the New York Times wonders. The newspaper speaks of ''probably insurmountable challenges'' even for professor Monti, who is also dealing with ''the resistance to change that characterises Italian society and politics." It is no coincident, the prestigious New York daily underlines, that all reforms launched by the technocrat government are still on halt in Parliament, blocked by hard opposition to painful but necessary measures. ''It is not clear yet if Monti will be able to keep Italy from becoming the next domino to fall". The general fear is, that the 100 billion euros promised to Spain to rescue its banking system will not be enough, and that the fever will spread to Italy, making it the next to ask the international community for help, Bloomberg BusinessWeek underlines as well. The analysis made by the Wall Street Journal is on the same line. The Journal stresses that the challenges Italy is facing are probably ''too many for a man alone, even if that man is Mister Monti". According to the Wall Street Journal, the next crucial step is the upcoming election in Greece, which the newspaper calls the ''main threat'' to the future of the eurozone and beyond. The situation will be assessed at the next G20 meeting in Los Cabos, Mexico, on June 18 and 19. In this meeting, Europe will be asked to take more concrete measures during the summit of EU state and government leaders by the end of June. Ahead of this crucial summit, U.S. President Barack Obama is ''in close contact with the European capitals,'' said White House spokesman Jay Carney, who repeated that ''it is no mystery what we must do to deal with the enormous challenges we are facing and to revive the economy and unemployment: we must act at once. We know where the weak spots are." The message is aimed once again at Europe, but also at the Congress, which Obama has accused of blocking his reforms meant to boost the re-launch. From an electoral viewpoint, the general feeling in the U.S. is that the Obama administration is at risk. If the eurozone crisis deepens and even economies considered to be too big to fail start to collapse, the global consequences are beyond imagination. And the chances that the first Afro-American president in the U.S. history will be re-elected would fall to almost zero.Crisis: Spain; EU rescues banks, not country, Krugman
Planned bailout no solution for Spain
Crisis: Eurozone worrying U.S., possible spread to Italy
Too big a challenge for Monti? WSJ. Huge problems, NYT
From L-R Italy's Prime Minister Mario Monti, US President Barack Obama, British Prime Minister David Cameron, Russian Prime Minister Dmitry Medvedev and German Chancellor Angela Merkel sitting at a table during a recent G8 meeting in Camp David
Tuesday, 12 June 2012
This statement was made by Paul Krugman, U.S. winner of the 2008 Nobel Prize for the Economy, in an opinion article in the New York Times, cited today by El Pais.
The article regards the bailout of the Spanish banking system with 100 billion euros, agreed by the Euro Group and Spain.
According to the economist, the bailout is necessary, but is ''not the solution Spain needs.
" Krugman complains that the European authorities ''are always ready to spring into action to defend the banks, but otherwise completely unwilling to admit that its policies are failing the people the economy is supposed to serve." He also reproaches the European Central Bank for refusing to lower interest rates.
''Unemployment in the euro area has soared,'' Krugman writes, ''and all indications are that the Continent is entering a new recession. Meanwhile, inflation is slowing, and market expectations of future inflation have plunged.
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