Blogging from the Murcia region of Spain until early June, when I return to
the Highlands of Scotland for a few months

'Fair and softly goes far' - Miguel de Cervantes

Sunday, 3 January 2010

Spain's economic bind succinctly outlined

Barcelona-based Catalan-British economist Edward Hugh reproduces in his Bonobo Land blog the English text of his La Vanguardia interview (in Spanish) with Paul Krugman, Nobel Economics prize-winner and holder of Professorial posts at both Princeton and the LSE. The interview is wider-ranging than Spain, but does give a pretty clear exposition of where the country now finds itself. It's well-worth reading the full interview and it wouldn't to any harm either to follow on a pretty regular basis Edward Hugh's Bonobo Land blog if you don't already so so and have an interest in the Spanish economy, in particular. A brief extract to whet your appetite:




Question Six (of Ten)

Edward Hugh: Last December you publicly warned of a burgeoning economic crisis on Europe's outer frontiers. Indeed you even went so far as to state that the center of the present crisis had "moved from the U.S. housing market to the European periphery" - and by periphery here I take it you mean countries like Ireland, Spain, Greece, Romania, Bulgaria, Hungary and the Baltics. With hindsight, and looking at how Europe sovereign debt, with Greece in the forefront, has suddenly become the "plat du jour" for the financial markets, this seems to have been extraordinarily perceptive. What was it about the situation on Europe's periphery that attracted your attention at such an early stage?

Paul Krugman: Numbers, numbers, numbers. Those huge current account deficits practically screamed “bubble”. In general, it’s been amazing how useful even very rough measures of imbalance have been at predicting crisis, in everything from U.S. housing to Latvia. And that makes it even more amazing how few people recognized the warning signs.

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