Spain

Spain's powerful world empire of the 16th and 17th centuries ultimately yielded command of the seas to England. Subsequent failure to embrace the mercantile and industrial revolutions caused the country to fall behind Britain, France, and Germany in economic and political power. Spain remained neutral in World Wars I and II but suffered through a devastating civil war (1936-39). A peaceful transition to democracy following the death of dictator Francisco FRANCO in 1975, and rapid economic modernization (Spain joined the EU in 1986) gave Spain a dynamic and rapidly growing economy and made it a global champion of freedom and human rights. The government continues to battle the Basque Fatherland and Liberty (ETA) terrorist organization, but its major focus for the immediate future will be on measures to reverse the severe economic recession that started in mid-2008.

Economical characteristics

 * Currency: Euro (ISO code: EUR)
 * Central bank discount rate: 3% (May 2009)
 * Commercial banks lending rate: 11.02% (31 December 2008)
 * is part of the Eurozone 

Notable events:

 * Banking crisis: 1814-1817, July 1829, 1846-1847, 1920-1923, 1924-1925, 1931, 1977-1985, 2008
 * Years in inflation: 3.8% (share of years 1800-2009 with annual inflation above 20 per cent per annum)
 * Public default: 1557-1560, 1575-1577, 1596-1597, 1607, 1627, 1647, 1809, 1820, 1831-1834, 1837-1867, 1851, 1877-1882 (external), 1557-1560, 1575-1577, 1596-1597, 1936-1939 (domestic)

Crisis in Spain
Spain, the euro zone's fourth largest economy, has stagnated as other European economies begin to recover from the global economic downturn. The bleak outlook for Spain, which has debt obligations three times that of Greece, has raised the specter of a broader debt crisis.

Spain massively invested into production of renewable energy, creating a bubble. No other country has given such broad support to the construction and production of electricity through renewable sources. According to a study of March, 2009, for every renewable energy job that the State managed to finance, on average 2.2 jobs would be destroyed. The rising energy costs were complained about by large energy-intensive producers, some companies have frozen their expansion plans, scaled down their operations or considered leaving the country altogether. In 2010, Spain has started to cut subsidies to reduce energy prices.

In 2006, the height of the housing bubble, 760,000 houses were constructed; more than the 650,000 started that year in France and the United Kingdom, with a combined populations almost triple that of Spain. Between 2001 and 2008 around four million new houses have been built and the average number of housing units completed per year was 565,000, more than double the figure of 250,000 for the previous decade. This is equivalent to the construction of twelve dwellings per thousand inhabitants, far in excess of the European average of five per thousand.

In 2009, after the collapse of the construction sector caused by the bursting of the housing bubble and the effects of the global economic crisis, the number of housing units started to fall to 160,000, and there were almost 700,000 housing units in stock (that is, completed but unsold).

In second quarter of 2010, Spain's unemployment rate rose to 20.09 percent, up from 20.05 percent from the previous quarter. It is the highest level in 13 years, and it comes despite a rise in seasonal jobs for the summer. The figure means 4.6 million people are jobless in Spain. By 2009, unemployment among people ages 16 to 24 was 42.9 percent, the highest in Europe.

In March, 2011, Moody's downgraded Spain's credit rating, citing worries over the cost of the banking sector's restructuring, the government's ability to achieve its borrowing reduction targets and grim economic growth prospects.

In June, 2012, Spain's Treasury minister Cristobal Montoro said Spain's high borrowing costs mean it is effectively shut out of the bond market. He said Spanish banks should be recapitalized through "European mechanisms", departing from the previous government line that Spain could raise the money on its own.

Prime Minister Rajoy has also voiced concern that Spain cannot continue to finance itself indefinitely on the market at such high borrowing costs. He has repeatedly called for urgent action, which is understood to be aimed at the European Central Bank to revive its bond-buying program or inject more liquidity into the financial system. Spain is pressing for a direct European rescue for its banks, without the government having to go through he humiliation of asking for help, but Germany has appeared to rule out such a "bailout lite" for the euro zone's fourth biggest economy.

Links

 * Spain on Wikipedia
 * Central bank of Spain
 * Studies from the Library of Congress (1986-1998)
 * BBC country profile
 * A Spanish Entrepreneur vs. The State by Sterling Morton, November 2005
 * Spain's Dire Choice: Flee The Euro Or Crush Its Own Wages by Gregory White, September 2010
 * New Light on the Prehistory of the Theory of Banking and the School of Salamanca (pdf) by Jesus Huerta de Soto, 1996
 * Spain's Dropout Generation by Jaime Levy Moreno, June 2010
 * Mercantilism in Spain by Murray N. Rothbard, from An Austrian Perspective on the History of Economic Thought, vol. 1, May 2010
 * Downgraded Spain decides to shelve worthless enviro-energy projects by David Freddoso, April 2010
 * Job Losses From Obama Green Stimulus Foreseen in Spanish Study by Gianluca Baratti, March 2009
 * Spain orders drastic caja clean-up to win confidence and fight off EMU debt contagion by Ambrose Evans-Pritchard, February 2011
 * The Comuneros: The Revolt and Its Lessons by Peter C. Earle, April 2011
 * Simmering anger in Seville by Paul Mason, June 2012
 * Spanish apathy turns to anger at corruption 'epidemic' by Pascale Harter, February 2013
 * Is the Spanish Recovery on Siesta? by David Howden, October 2013
 * Is the Spanish Recovery on Siesta? by David Howden, October 2013