Is Spain the next Greece?

No, according to Mr. Zapatero.  He told CNBC that house prices in Spain had reached their bottom and would not fall any further. Really? Has anyone told him the mismatch between rents and prices? Has anyone told him that the economy, at Depression levels of 20% unemployment, is facing the abyss?

That the bond markets want a ‘hair-shirt’ budget of swingeing cuts to prove his market machismo. A bit like what they are doing in Greece with those other ‘socialists’.

Spain has been a leading light in renewable energy so far this century. I hope it does not destroy a promising industry – one of very few worldbeaters it has in its arsenal.

Zapatero’s PSOE have cobbled a deal with the right-wing Basque nationalists (PNV) to avoid an early general election, and probable defeat.

The general strike on September 29 next week will pave the way for a challenge from within the centre-left’s ranks. So far, the two richest states (Catalunya and Pais Vasco) have suffered a lot less than Andalucia, Murcia or Extremadura.

They hold the key.

Unfortunately, the peninsula looks like falling into the Greece trap of trying to please an ungrateful market. It will cut, cut and cut and still be trashed financially.

Wait for the Greek default over the next 24 months (or sooner). Madrid will be caught in the blowback.

It will then wish it had put down building blocks for a modern low-carbon industrial infrastructure and a more equal society and state.

History is not in its side. Madrid (and Toledo before it) has always believed in an imperial world of rent collection, whether from Latin American colonies or the northern and north-eastern nations. It might need to go into ‘cold turkey’ to break that habit.

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