No one is lending money to Spanish banks, which means that sooner or later Spain has to borrow emergency funds from the newly established European stabilisation fund. Since the Euro will not be devaluated, Spain will have to reduce prices to export and remain solvent. When prices are going down it is called deflation. Spanish people will have to re-learn to work.
Something, maybe the Spanish situation, frightened today TASE investors. It started rising 2% and ended the day plunging 2%. Expletive deleted.
1 comment:
I read today that Greece is now paying its medical suppliers who had threatened to withhold vital drugs, etc. because they had not been paid in a year or more. However only 1/2 the amount owed will be paid in cash and the other half will be Greek bonds that are interest free. This is also bankruptcy by another name. Meanwhile, in the future these suppliers will either no longer do business with Greece or will demand higher prices because they know they may not be paid or can expect payment only in the distant future - they will build the discount in to their pricing (plus some more to get even with their losses in the past).
K
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