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Spain's Partido Popular Rajoy government sees concessions to the Syriza government in Greece in difficult EU-Greece negotiations as emboldening a similiar Podemos movement in Spain. It sees this as putting at risk the still fragile economic recovery in Spain. From this point of view it is better for Greece to exit the eurozone, according to Simon Nixon.

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Unemployment in the eurozone drops to 7.7% in 2017. Unemployment in Spain drops to 17%.

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Martin Feldstein points out why the recent agreement for a "fiscal compact" is no more than an empty statement about fixing the eurozone's finances. In this respect it is no different than the Stability and Growth Pact it replaces, with serious weaknesses. Feldstein cites the weaknesses in the language of the agreement. Each eurozone country is required to limit its"cyclically adjusted" budget deficit to 0.5% of GDP and bring its debt down to 60% of GDP. Compliance will be performed by the European Court of Justice and fines imposed. In practice the questions loom large- for a country like Spain with a 23% unemployment rate, isn't all of the 6% budget deficit cyclical? Again the agreement says deficits are calculated "net of one-off and temporary measures." Under this provision a lot of the stimulus programs would be considered in the category of "one-off." Other language lets eurozone countries frame budgets based on "exceptional circumstances" and "periods of severe economic downturn." Italy has declining economic growth, does it make sense to have a large budget surplus in that situation to lower debt to GDP, and how does that goal relate to "exceptional circumstances."...

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The manufacturing purchasers index for the eruozone was 45.1, remaining at the same level as May, a three year low, according to survey firm Markit. The figures are based on a survey of purchasing executives. Index figures below 50 indicate contraction in the manufacturing sector. Germany was at a PMI of 45, Spain at 41.1. The PMI reports indicate a contraction of 1% at an annualized rate for the eurozone economies in the 2nd quarter of 2012.

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GDP growth in the eurozone was 0.3% for the 4th quarter 2014. For 2014 eurozone GDP growth was 1.4%, according to Eurostat. Growth in GDP for Germany was 0.7% for the 4th quarter and 2.8% for 2014. Retail sales in December were particularly good in Spain and Germany, with sales up 2.8% for the eurozone over the prior year. Italy's GDP growth was stagnant and France's was 0.1% for the 4th quarter, showing that Germany and Spain are leading the way for eurozone recovery.

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Lower oil and natural gas prices are a big boost to the economies of the US and the European Union. Cost savings equal about 3.5% of GDP in Italy and 2% of GDP for Portugal, Germany, and Spain, according to Capital Economics. The price of oil has dropped to $77 a barrel from $121, falling below its pre Ukraine war levels. This boost could increase eurozone output by 1.5%, equivalent to about a years worth of growth. Instead of contracting by 1.3% eurozone economies are expected to grow by 0.7%.

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ECB president, Mario Draghi, said on March 25, 2014, "we will do what is needed to maintain price stability." Annual inflation in the eurozone declined to 0.6% forecast for the eurozone, 0.9% for Germany, and a negative 0.2% in Spain, for Feb. 2014.

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After recovering from the eurozone financial crisis Spain is recovering with low inflation of 1.8%, and growth of 2.4% in 2024, 2.1% in 2025, and unemployment at 11.2%. Even with high unemployment prime minister Pedro Sanchez of Spain sees new immigrant workers aiding higher growth and supporting pensions- Spain's tourism growth also supports this. “The contribution of migrant workers to our economy is fundamental, as is the sustainability of our social security system and pensions.” This makes Spain one of the only countries to continue supporting legal migration to the country- 250,000 are needed both in high skilled jobs in hospitality and construction, and "invisible" jobs in agriculture and other places. 1 million migrants will arrive each year till 2028. Spain will also give legal stats to 500,000 undocumented migrants mostly from Latin America including Venezuela's middle class. ...

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The ECB president Draghi announces an interest rate cut, lowering the interest rate in the eurozone to 0.15% from 0.25%. He also lowered the rate on overnight bank deposits at the ECB to a negative 0.10%, to encourage banks to lend at a time when credit is tight for businesses in the eurozone. The eurozone faces a risk of deflation with low growth in the eurozone economies. Popular discontent was reflected in eurozone elections in France, UK, Greece and Spain.

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Eurozone data shows the GDP growth far outpaced the U.S.. In the first quarter GDP growth was 0.5% from the prior year, the annualized rate at 1.8% compared to 0.7% for the U.S.. European stocks are benefiting from the recovery in the eurozone. A global recovery in inflation is also helping, with political risk fading. Recovery is also taking place in parts of southern Europe, with 3% growth in Spain.

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Lilith Verstrynge, former party secretary of Podemos, and daughter of a Belgian politician, describes the rise and collapse of Podemos, a popular party in Spain in a coalition duringthe Covid years with the Socialist party in Spain led by Pedro Sanchez. A 31 year old who now teaches in Paris describes Podemos- a social movement based on online support and no organization under Pablo Iglesias which collapses in Spain by 2024. Podemos or translated into Spanish as "We Can" emerged from the 2009 banking speculation caused financial crisis and the years that followed with the Eurozone financial crisis which entangled the economies of Spain, Ireland, UK, Greece, and other nations in the European Union. As he crisis receded and with action taken under Pedro Sanchez's Socialist government in the areas of housing, support services, and the economy, as the economy improved the movement gradually fizzled out. Under Sanchez the Catalonian independence movement also receded with elections in Barcelona and Catalonia brining to power a socialist government. This period in Spanish political upheaval is described by Verstrynge in The Guardian, who retired from politics in her early 30's as a result. She says without any organizational structure to support such online movements once the initial surge in interest is passed there is no way to sustain it. ...

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The ECB's monetary policy is making its way through the financial system to help homeowners in the eurozone with their mortgages. A large majority of Spain's home mortgages have rates that increase or decrease according to the level of 12 month Euribor, according to Spain's mortgage association. The mortgage rate is normally set by adding about 0.3% to the Euribor 12 month rate. In Italy about half the mortgages have variable rates, most linked to Euribor, according to mortgage broker Mutuionline. The decline in 12 month Euribor rate to 0.187% by April 2015, as a result of the ECB's monetary policy, provides significant relief to mortgage holders during the eurozone economic crisis. This is especially true for Spain with its housing crisis and high unemployment. In Portugal the interest rate on most mortgages is determined by using the monthly average of the 3 month and 6 month Euribor, which are close to zero. Some mortgage holders in Portugal are seeing their mortgage payments cut by about half as a result, providing much needed relief to homeowners with mortgages. This is one way in which the ECB's monetary policy is helping the eruozone recovery in 2015-2016. Spain and Portugal suffer from high unemployment which has led to many homeowners unable to afford their mortgage payments, affecting everything from housing prices to consumer spending and demand in the economy, with severe effect in the period 2011-2014....

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Inflation was a little above the eurozone average of 0.7% for Jan. 2014 in Germany and below the average in Portugal, Spain, and Ireland.

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Public sector layoffs in Spain in 2012-2013 under the governments deficit reduction plan- as mandated under fiscal compact rules agreed to in the December 2012 eurozone meetings- will worsen Spain's severe unemployment rate of 25%. These public sector layoffs are only now taking place. Upto now local governments had helped offset rising layoffs in the private sector by preserving employment. The result will be a further increase in unemployment in Spain, creating a crisis of large proportions.

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A plan being put together in eurozone financial circles is for Spain to request aid and the European Stability Mechanism fund to provide far less than 100 billion euros approved for aid to Spain. With the request Spain would agree to conditions set by the EU, ECB and the IMF for improving competitiveness, reducing rigidity in labor markets, and controlling spending by regions in Spain. This would lead to the ECB taking action to buy Spanish bonds and lower borrowing costs.

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Eurozone finance ministers meeting in Brussels give Spain one more year to meet deficit targets because of a slumping economy and lower tax receipts after raising taxes. Spain now has till 2014 instead of 2013 to meet the EU's 3% deficit target. Spain can now run a deficit of 6.3% in 2012, down from 8.9% in 2011, without risking EU penalties. The 2013 deficit target is 4.5% of GDP and the 2014 target is 2.8%. Spain can also have $30 billion by the end of July in the event that a Spanish bank needs to be recapitalized quickly.

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Inflation in the eurozone is running at 0.7%, well below the target of 2%. In a opening speech for a 2 day conference organized by the ECB in May 2014, ECB president Draghi said the increase in the value of the euro since 2011 has made commodities like oil cost less in euros, contributing to lower inflation. A key concern referred to in Draghi's speech is the data from Spain and Portugal about the difficulty for business to get loans in Spain and Portugal. About 25% of Spanish businesses and 33% of Portgual's businesses have difficulty getting loans. Even profitable companies have difficulty getting loans. One way the ECB could tackle this is to make cheap loans available to eurozone banks conditional on the money being lent to businesses and not invested in government bonds, as has happened during prior ECB efforts to capitalize banks.

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European Central Bank president, Mario Draghi, addressing the European Parliament in Brussels on April 25, 2012, supported both sides in the issues facing the eurozone, calling for continued vigilance on structural reforms to improve competitiveness of countries in the eurozone such as Spain and Italy, and at the same time saying it was imperative to generate economic growth. He told the European parliament: "The uncertainty about the present situation is very, very, high... Any exit strategy is premature given the current economic situation." Saying that the fiscal compact had been negotiated recently to control spending, yet what Europe needed was also a growth compact- "but my most present thought right now is to have a growth compact." He emphasized that it was now upto governments and banks to pick up the ball. The ECB's achievement was buying time with its 3 year loans to banks in Spain and Italy and other EU countries in Dec. 2011-March 2012, which he described as no ordinary achievement. Francois Hollande and Angela Merkel seized on Draghi's comments to show they were doing the right thing. Merkel conceded that growth was needed, saying sustainable initatives would be good for Europe, that what Germany was opposing was simply stimulus spending that would increase debt without the structural reforms to improve competitiveness. Hollande for his part said he would call for eurozone bonds to pay for industrial and infrastructure projects, and a financial transactions tax....

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China's vice premier, Li Keqiang, wil visit Spain Jan 4-6, 2011. In an editorial page article for El Pais, Li wrote that China will continue to purchase Spain's public debt in the future. China is a large buyer of Spain's sovereign debt, owning about 10% of the total foreign holdings. Spain's central government will need to raise 170 billion euros in 2011, and its regional governments an additional 30 billion euros. Natixis expects 824 billion of eurozone government bonds to be auctioned in 2011. For China the eurozone is its largest market and it is concerned abou the impact of a eurozone crisis on imports from China. A declining euro would make Chinese exports less competitive and costlier in European markets. And China is wary of the impact on its export industries at a time when its economy is trying to make a soft landing, and strains are showing with an asset bubble in real estate, too much bank lending and high inflation.

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Proposed ideas being considered at the EU headquarters in Brussels include the European bailout fund, the European Financial Stability Facility (EFSF), being made a bank with funding from the European Central Bank. The EFSF would be able to buy the bonds of Spain and Italy in primary and secondary markets alongside private buyers. As an alternative the ECB would be able to buy Spanish and Italian bonds directly. Here the problem is keeping private investors in the market given the large financial needs of Spain and Italy. In the restructuring of Greece's government bonds the ECB took the position that it would subordinate the claims of private investors in Greece's government bonds and not take loss. Concerns of private investors could be addressed by the eurozone governments giving an explicit indemnity to the ECB to cover any losses suffered in the purchase of Spanish and Italian bonds. Both steps, the direct purchase of Spain's and Italy's bonds by the ECB or through the EFSF would mean doing something that is not in the ECB's charter- the financing of government debt- and would be done cautiously and only in a crisis situation. The caution would also be motivated by the need to ensure there is action to improve the competitiveness of Spain, Italy and other eurozone countries through specific measures, and no backtracking bygovernments....

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Larsen says the EFSF should get the funding it needs to recapitalize troubled European banks, as the first step to solving the eurozone financial crisis. Banks in Spain and Italy that failed stress tests would get funds to build up their capital. Creditor haircuts should be part of the effort to reduce the debt burden of troubled eurozone countries.

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In this Agenda column Simon Nixon takes on the U.S. Treasury's criticism of Germany for its current account surplus of 7% of GDP in 2012, and not doing enough for the economies of southern Europe. The German government called it "incomprehensible." Nixon says it is better for the German economy to remain strong and to boost competitiveness and consumer spending in Spain, Portugal, Italy and Greece. He says the low eurozone inflation of annualized 0.7% for September 2013, which prompted the ECB to cut rates by 0.25%, is healthy to the extent that consumer prices are declining to adjust to a decline in wages. The reduction in labor costs is a way to restore lost competitiveness, just as Germany did in the last decade. The criticism is considered by many economists to be misdirected, and seen as "incomprehensible" by Germans, as Germans ask what would the U.S. have them do- provide stimulus when the government debt to GDP ratio is currently 82%, increase wages and how would this help Southern Europeans. Focussing on Germany's current account surplus says Nixon, is obscuring the larger issues of increasing consumer and business confidence and spending in the eurozone, and increasing bank lending. The new ECB bank resolution arrangements and other changes including deposit insurance if done right should help the recapitalization and restructuring needed for restoring bank lending to support recovery. Spain is furthest along in regaining competitiveness, with changes in Portugal, Italy and Greece also supporting a gradual return to growth....

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President Hollande of France is interviewed by Sylvia Kauffman of Le Monde, Angelique Chrisafis of The Guardian, Berna Gonzalez Harbour of El Pais, Jaroslaw Kurski of Gazeta Wyborcza, Alberto Mattioli of La Stampa, et Stefan Ulrich of Suddeutsche Zeitung in mid-October 2012. He tells the reporters that France is the bridge between northern and southern Europe and says he is against division, rancor and the idea of 'each for one's own.' He called recession being as big a threat as deficits and emphasized the need for growth. Hollande pointed out that it was false to say Germany was the only country paying to help, that France was also paying for the solidarity with other eurozone countries. From now on he sees the need for monthly meetings of eurozone countries as opposed to crisis driven meetings which have failed to produce results needed and led to procrastination and political maneouvring. On Merkel's side there is internal politics and parliament which has affected decisions in in the interests of the eurozone and the EU, which he said he respects but which also requires putting the interests of Europe first. On specifics Hollane sees no need to further delay action on direct aid by the European Stability Mechanism to Spanish banks and efforts to bring down Spain and Italy's borrowing rates, and calls the gap between France and Germany's borrowing rates of 1% and Spain and Italy's 7% "unfair."...

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This Journal editorial says Germany and France will have to pay for preserving the Eurozone one way or another. It suggests a direct approach of the German and French governments injecting capital for recapitalizing German and French banks that would take losses on bad loans to Greece, Ireland, Portugal, and Spain; combining this with bondholder haircuts for creditors, and reforms that include spreading the burden for Irish bank debt and cleaning up the cajas savings banks mess in Spain. This would mean exactly the opposite of what is taking place now, including the abandoning of individual country rescues and bailouts; which the Journal calls extending loans and pretending the problem is not with German and French banks that would have losses on the bad loans. The problem is that this places the entire burden on austerity measures in each bailout country which reduces growth and raises unemployment to levels that make the problem much worse than before. This is not happening because of a serious failure to reach agreement on the shared sacrifice and cooperation between the governments, creditor banks, the ECB and other parties in the eurozone, on a serious debt restructuring across the eurozone that would put the euro back to stability with some mechanism for serious financial discipline in eurozone states....

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The Bank of Japan's plans to buy 100 trillion yen of Japanese government debt in 2 years to fight deflation is having a positive effect on the eurozone economies. Japanese investors are buying eurozone sovereign debt. J.P. Morgan estimates the increase in investments for overseas bonds by Japanese investors in 2013 at 45 billion euros. This is lowering the yields on the sovereign bonds of France, Netherlands and Austria to record lows and lowering the yields of sovereign bonds of Italy and Spain. The 10 year yields on Italy's government bonds declined to 4.326%. Yields on 10 year Japanese government bonds was 0.514% on April 8, 2013.