The S is Hitting the Fan

Feel free to substitute your favorite "S" word. Some might choose Spain. Others might choose stagflation. There's also the obvious, but the powers that be tell me that's already fully priced in.

OECD warning as stagflation goes global

The ECB's task is doubly complicated by the yawning gulf between the Germanic and Latin blocs of the eurozone. Industrial output fell in Italy, France, and Spain in March. April manufacturing orders fell at the fastest rate since the dotcom bust in Italy and Spain. "We're suffering a clear and profound slowdown in the Spanish economy", said Pedro Solbes, the country's finance minister.

That's priceless. Here are last year's quotes from the "See Also" section below.

David Taguas, Head of the Spanish Prime Minister's Economic Research Unit:

To talk about severe adjustments or a meltdown in prices is ridiculous.
That sort of crisis is unthinkable.
Is completely out of the question.
We have the good fortune to have one of the most efficient financial systems in the world. That's insurance in times of turbulence.

Rafael Pacheco, Housing Director, Spanish Government:

You cannot speak of a crisis.

The issue of Spain's crumbling property market intruded on the bank's policy agenda last week, pitting the South against the hawkish Bundesbank chief Axel Weber.

Crumbling? I thought they were counting on it. Last year government officials said:

Spain plans to restore a fifth of its coastline from overdeveloped concrete jungle to a more natural state by enforcing legislation to demolish illegal construction.

"The euro has been trading on the German export story. The market has conveniently ignored the collapse in Spain, and the near recession in Italy," he said.

That's just like the market, isn't it?

See Also:
Spain's Economy Revisited