Spains Financial Crisis A Case Study - 893 Words

Furthermore, Spain must be safeguarded against new interest rate hikes, as high-interest rates are likely to lead the debtors to claim bankruptcy. As a result, it is more vulnerable to the uncertainty and panic in the financial market. Amidst the ongoing recession and soaring unemployment rates, the damaging austerity policies have proven to be costly to the healthy sectors, making it difficult to cope with the collapse of the economy. This has slowed down the pace of Spain’s economic recovery. Therefore, acting as a shield, GLBs could protect the economy from the risk of facing higher interest rates, at least until growth picks up. Beyond the simple exercise shown above, the main objective has been to show that GDP linked bonds provide†¦show more content†¦Considering the climate of political paralysis until some time ago and high unemployment rates, the country’s minority government unveiled more spending on social measures in a delayed draft budget for 2017, thus a great cloud of uncertainty surrounds the future of austerity policies. This means that the government can easily fall short of its budget targets. In addition, the impact of moderate debt reduction on fiscal adjustment program is discussed. If one takes the baseline scenario, a moderate reduction in debt stock does not significantly reduce the degree of austerity required. This is probably because Spain is suffering from high levels of private debt of households, companies, and Spanish financial entities, which has majorly accumulated as a result of the large real estate bubble. After the property market crash, Spanish banks and savings banks have been dependent on the Spanish authorities and European Central bank for covering most of its losses. There is uncertainty about the scale of future losses and its influence on the government’s budget. Moreover, since the domestic banking sector has a stake of in the 40% in debt, reduction in the principal value of government securities may lead to large losses on the banks balance sheet, and threaten the stability of the domestic banking sector. The single equationShow MoreRelatedSpains Financial Crisis2845 Words   |  12 PagesCASE 1 Spain’s in trouble Spain started facing economic troubles since 2008 global crisis. Financial crisis caused a huge crash in the property market and significant losses at its banks. These days Spain’s citizens take part in polls in Galicia and Basque regions. Galicia’s PM Mariano Rajoy lost part of national support due to his austerity measures. Basque country’s Socialist Party met opposite influence from Basque Nationalist Party. Unemployment rate in Spain grew to 25% in some regions likeRead MoreBullfighting in Spain1474 Words   |  6 Pagesthe rule of social order in Rome, these kinds of cults were driven underground or out of existence altogether, Ogorzaly explains (15). That said, it is possible that vestiges of the bloody cult practices continued through certain rites like Spains medieval nuptial bed, which according to anthropologist Timothy Mitchell views as the actual origin of the modern bullfight in Spain. The medieval nuptial bed custom is explained by Mitchell: The custom †¦called for the bride and the groom to stickRead MoreReflection of Bonuses in Bad Times707 Words   |  3 PagesBonuses in Bad Times Spain financial crisis began from 2008, and many companies were affected, included the Spain big retail chain——Superado. Bonuses are the reward for the good performance. 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A ccording to Bolloten and Esenwein, once Francisco Franco came into powerRead MoreMacroeconomic Comparison Between Spain And Austria2503 Words   |  11 Pages2 Executive Summary This case study will present a Macroeconomic comparison between Spain and Austria, of four important factors present in both countries: economies policies, infla-tion/unemployment, GDP growth and interest rate/public debt ratio. For each section in the following report, there will be an evaluative analysis of the per-formance of each country and as well a comparison. 3 Introduction 3.1 Austria Austria is member of the European Union since 1995 and entered the Euro ZoneRead MoreIssues in Global Business1296 Words   |  6 Pagesevaluation and implementation of strategic concepts. These early stages of the module are designed to develop students’ analytical, problem-solving and decision-making skills. 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