Monday, May 14, 2012

More Pain in Spain

So far, Spain’s handling of these difficult choices has failed to restore confidence. Instead of winning support from international investors and attracting fresh investment, the austerity program has produced bitter fruit: recession, spiking unemployment and little faith that either growth or control of public debt are within reach. With investors still skeptical about Spain’s financial health, the government has to pay about 6 percent interest to borrow money. That rate is too expensive to be sustainable because it will boost the government’s obligations to a level that would be hard to pay off, setting up a deadly debt spiral and forcing Spain to raise interest rates yet higher if it is to convince anyone to lend it more money.

-The Washington Post. Read the full story.