LaRouche: It Doesn't Take a Lot of Imagination

February 19, 2010 (LPAC)—After Lyndon LaRouche identified the fact that the crisis in the Eurozone is not centered in Greece, but rather in Spain, as evidenced by the fake assets of the UK's own Banco Santander, the focus has now shifted to Spain as Europe's "weak link." As LaRouche said yesterday, it does not take a lot of imagination to figure this out.

The current issue of Business Week runs an article by Sean O'Grady entitled: "Euro Zone Fears Spread to Spain, Though its finances are in better shape than Greece's, there's growing nervousness in Europe that Spain could be the next weak link in the euro zone."

O'Grady writes: "The fear is that the next member of the so-called 'PIIGS'—Portugal, Ireland, Italy, Greece and Spain—to suffer a crisis of confidence will be Spain. And yet fears are growing that, even though the Greek crisis is far from resolved, Spain could be the next 'weak link' as the Greek Prime Minister, George Papandreou, described it a few weeks ago. Now the Spanish Prime Minister, Jose Zapatero, has virtually admitted as much is happening to him, blaming 'speculators' for Spain's travails. Spain's annual budget deficit, like the UK's and Greece's, has spiraled well into double figures—at almost 12 percent of GDP it rivals Greece's Olympian disregard for the old Maastricht treaty rules of prudence. And the markets are worried. The problem is size." Even the incompetent Paul Krugman is quoted by O'Grady as saying: 'In economic terms the heart of the crisis is in Spain, which is much bigger.'

Financial Times author, Walter Muenchau, has also caught on, belatedly, in an article entitled: "Why I worry more about Spain than Greece." After pointing out that the European Union now has a bailout rule, which is that a country can be bailed out if it agrees to brutal austerity conditions, Muenchau asks, "What if the country did not, or could not, comply with the conditions?"

While stupidly arguing that the crisis may be five years away, when it is actually today, Muenchau continues: "Greece will almost certainly not be that country, but Spain just might.... Now what would happen if our new bailout-rule meets a Spanish crisis, say in five years time? I would bet that whoever will be Spanish prime minister then will respond with a rude finger sign, walk out of the meeting, travel home, and declare with pride that Spain would not accept such an extreme loss of sovereignty. Better to perish than to be subjected to a hostile foreign rule. The next day he would declare a moratorium on the country's debt. What then? Germany may be reluctant to bail out Greece for all sorts of reasons. But Germany will do it. But Germany cannot conceivably bail out Spain. Germany and France together cannot bail out Spain. Spain is too large. And Spain is guaranteed not to be nearly so compliant as Greece.