The European Central Bank has disclosed details of its emergency operation to save Italy and Spain from the debt crisis, revealing that it spent a record € 22 billion on government bonds.
The admission comes ahead of Tuesday’s meeting between French PM Nicholas Sarkozy and his German counterpart Angela Merkel in a further bid to stem the spread of the crisis.
Small business owner Joachim Araque, who together with his nephew runs a picture-framing shop opened by Joachim’s grandfather almost a century ago, says the family firm is going through tough times.
“Like all in Spain, my business has been struggling. Although it’s not visible in all areas of business, times have been very hard,” says the man who combines the privilege of living for his work with the necessity of working in order to live.
Consider this: Spain is notorious for having unemployment at more than 20 per cent – one of the highest in the eurozone – and carrying a gargantuan sovereign debt burden with ever-costlier bonds. And the country’s problems do not stop there.
Despite being the fourth-largest economy in Europe, Spain is definitely feeling the bite of the credit crisis, and that has left many asking a question: is the eurozone such a great idea, after all?
The answer may just be, “No”.
Spain’s rating has been downgraded twice since last September, with the Moody’s agency threatening to do so again in the future.
In fact, some in Spain believe the best strategy in the current climate may be an exit one.
“This [exit from the eurozone] would give us a certain autonomy. It would have a positive effect on internal processes in the country and on purchasing power, and would give citizens access to all sorts of benefits, and would have been good for wages. It could very well lead to an improvement of the situation in Spain,” believes Carlos J. Moreiro, Chair of Economy, Free School Eméritos in Madrid.
A key factor here is distance: while the Spanish struggle with debt and unemployment, their fate is largely being decided by Europe’s paymasters-in-chief – in Brussels.
“What we’re witnessing here are major internal problems, which you cannot solve out of Brussels, because it’s outside of EU competence,” acknowledges Carlos J. Moreiro. “They have neither the finances nor the labor capabilities to help Spain. Of course, many people are unhappy with the place Spain takes in the European Union.”
But craftsman Joachim Araque is not losing hope that his country and his business will eventually climb out of the slump.