Messing with the bull (again)

Like in the beginning of the eighteenth-century, Spain is in bad economic shape. Then, however, a surge in monetary production and imports contributed to a marked “price revolution” (a.k.a. inflation) in Spain and, to a lesser extent, with its trading partners. While no longer the world’s primary producer of money, the topography has little changed. Some features of Spain’s economic ‘backwardness’ are historically recurrent, and seemingly extend into Spain’s horizon.

Credit issues: Spain’s credit rating has been downgraded. What does this mean? Countries have credit ratings to illustrate how likely they will be able to repay government debt obligations. Spain will appear more “risky” to foreign debt (bonds) investors. With a history of bankruptcies extending into the centuries, this is nothing new to Spain really. Even after Spain declared bankruptcy in the seventeenth-century, for example, investors continued to lend to Spain (buy bonds/debt). But, naturally, they asked for higher returns from Spain to balance the risk. This prolonged, to a certain degree, Spain’s fiscal ineptitude. We can assume a similar situation now.

Unemployment: Spain’s unemployment continues to be its Achilles' heel of economic growth. While news agencies bicker over the figure, an unemployment rate nearing 20 percent bodes poorly for Spain’s future. Again, this is nothing new. While the last time it was this high was in the late 1990s, unemployment too has a historical precedent that can be measured by the centuries.  People then cited the laziness of Spain’s ever-abundant aristocracy.

With the near-simultaneous downgrade of Greece’s and Portugal’s credit rating woes, the Eurozone seems to be in bad shape. With lenders lacking the confidence to lend money to struggling economies, countries will need to take drastic measures to minimize their debt obligations by either cutting spending or increasing taxes. With a mushrooming national debt, the United States - I fear - will soon be faced with a similar conundrum.

Studying conceptions of money in eighteenth-century Spain, it’ll be interesting to observe contemporary assessments of its worsening economic climate.