viernes, 27 de enero de 2012

Spanish economy and its financial system (Presentation for visit Dutch group 26.01.12)

Thank you for your visit. I would like to speak on the following two points: the situation of spanish economy in the middle of this crisis, and, in the second part of this short speech, I would like to focus on the financial sector. Both of them are absolutely linked each other. In fact, they are 2 sides of the same coin.

After 4 years, we are entering in a new recession. Started as a financial crisis in the USA subprime mortgage market, turned into a first economical recession in 2009, into a fiscal crisis because the increasing deficits and public debts, into a banking sector fall because the interaction between public debt and financial system, into a political crisis because has revealed the European governance weakness and all the political leaders are being wiped out by elections, and, finally, it’s turning into a social crisis: 200 million people around the world currently unemployed are calling for action to avoid the ‘lost decade’, specially for youth.
This crisis has all the elements to be a perfect storm: deep, globalized, complex. Indeed, we are in a vicious circle: weakness of economic growth, sovereign debt crisis and fragility of financial systems are feeding off each other.
In the short term, the most important challenges are to solve the sovereign debt and banking crisis and to restart growth. Crisis has been quite severe so far. But things are likely to get much worse. The latest forecasts of international institutes are quite depressive: recession again, poor economic activity, high unemployment with all its negative and social consequences.
Headlines of latest international reports say it clearly:
World Bank 2012: Uncertainties and Vulnerabilities
WEO (IMF): Global Recovery Stalls, Downside Risks Intensify
GFSR (IMF) Deeply into the Danger Zone
In fact, dark times are waiting for us. Bad time for poetry.