Spain's Fundamentals Were Not Sound

Morning Edition reported on Spain's slump this morning. The slump has pushed the unemployment rate into the high teens.

At one point the piece presents the views of an economist who asserts that Spain's fundamentals were sound prior to the downturn. This is not true. Spain had a huge housing bubble that led to a current account deficit that peaked at 10.0 percent of GDP in 2007. It should have been very clear at the time that its fundamentals were enormously unsound, it is remarkable that NPR found an economist who even now does not recognize that Spain's fundamentals were not sound during its housing bubble.

--Dean Baker

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