Posted: 09/27/2012 at 12:53pm
Euro Death Spiral: Spain, Greece in Total Emergency
VALENCIA, Spain -- The debt crisis plaguing several eurozone countries has crushed their economies. And now the situation in Spain and Greece is worsening.
Just as CBN News predicted over the past year, hunger and violence are growing. Some say the eurozone is in a death spiral.
On the streets of Madrid this week, it looked like revolution, with police and citizens attacking each other. The situation was just as violent in Greece, where rioters in Athens hurled gasoline bombs at police.
It was as if the end of the summer holidays reminded Europeans they still face the worst economic crisis since World War II.
Across Europe, stock markets tanked and the euro currency fell. The turmoil ended weeks of optimism from investors, who somehow thought -- or hoped -- Europe had turned a corner.
It clearly has not.
A former government official admitted that Spain is in "total emergency," and this is the worst crisis Spaniards have had to live through. The eurozone crisis is starting to grind more and more Spaniards into poverty.
At a soup kitchen in Barcelona, a small charity has been struggling to feed hundreds of poor people each week, many of them former members of the middle class.
And increasing numbers of Spaniards, too proud to go to a soup kitchen, are looking for food in dumpsters at night.
Too Big to Bail
Spain is Europe's fourth largest economy. It's been dubbed, "too big to fail, too big to bail." But Spain needs a bailout too and has had to join Greece in instituting sharp cuts in welfare.
That means the "good life" of cradle-to-grave socialism that Spaniards were accustomed to -- and that created the debt that caused this crisis -- is coming to an end.
Spain's central bank said its economy continues to shrink "significantly," sending markets down, borrowing costs up, and protestors into combat with the government.
"This is just a powerful signal that we are sending to politicians to let them know that the Spanish bailout is suicide and we don't agree with it, and we will try to prevent it happening," Pablo Mendez, activist from the 15M indignados movement, said.
Spain risks being destroyed by a perfect storm, with investors taking capital out of the country as quickly as they can, when more capital is exactly what Spain's banking system needs to survive.