Spain on the Brink?

By: Ian Campbell | Fri, Jul 13, 2012
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Why Read: Because economic risk in the Eurozone and elsewhere appears to be escalating, and what is said here describes what may prove to be the 'biggest crack yet in Humpty Dumpty's shell'.

Commentary: It was some months ago that I began warning in this Newsletter that Spain was the country watch carefully in the context of its unemployment rates, federal government deficits, GDP and housing problems. At the time Spain didn't seem to be the focus for most commentators that it was, and continues to be, for me.

Yesterday, the 'rubber hit the road', with the 'leaked release' of some of the apparent conditions that will be attached to the agreement reached by Eurozone country finance ministers two weeks ago. These conditions, which are said to include:

are being called 'draconian'. This is likely for no reason other than such extreme measures have not previously been seen until now among Eurozone countries. That said, it seems obvious that 'draconian measures' are called for, not just in Spain, and not just in the Eurozone.

While this was going on, Spanish Premier Maiano Rajoy announced:

Consider the consequences of these measures, which on the balance of probabilities likely include:

It typically is not a good thing when a 'small shoe drops'. Spain is a 'big shoe' in Eurozone terms. Watch for:

Topical References: Debt crisis: Spain bows to EU ultimatum with drastic cuts, from The Telegraph, Ambrose Evans-Pritchard, July 11, 2012 - reading time 2 minutes; Proud Spain again humbles itself to the euro's demands, from The Telegraph, Jeremy Warner, July 11, 2012 - reading time 3 minutes; 'This is reality': Spain slashes spending, raises taxes in $79B austerity plan, from MSNBC World News, Jeremy Warner, July 11, 2012 - reading time 3 minutes; and, Spain to Cede Bank Control, from The Wall Street Journal, Matina Stevis and Gabriele Steinhauser, July 10, 2012 - reading time 1 minute.



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Business Transition Simplified

Through his website and his Business Transition & Valuation Review newsletter Ian R. Campbell shares his perspectives on business transition, business valuation and world economic and financial markets influences on those two topics. A recognized business valuation and transition authority, he founded Toronto based Campbell Valuation Partners Limited (1976). He currently is working to bring his business valuation and transition experience to both business owners and their advisors in our new economic, business and financial markets normal.

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