I’ve been fascinated by some of the economic news coming out of Spain lately (my family is Basque). The reason is that it seems to be foreshadowing what could happen in the U.S.
The Spanish central bank basically told the government to stop spending so much money. Ten years ago, Spain joined the euro so the Spanish central bank really doesn’t have that much power. Still, this was interesting to see.
In the view of the economists at the Spanish Fed, any more fiscal stimulus will have little or no effect. Spain has already implemented one of Europe’s largest fiscal stimulus packages. The budget deficit will climb from 3.8% of GDP last year to 8.3% this year. As big as that is, it’s still less than our deficit.
In my Global Growth service, we’ve almost completely abandoned euro-land stocks. Instead, we’re heavily focused on China and insurance and shipping stocks based in Bermuda.