Why You Care That Spain's Jobless Rate Just Hit 21.5%

As Europe fights to avoid a financial collapse in Portugal, Ireland, Italy, Greece and Spain, on Friday, Spain, one of Europe's biggest economies announced its jobless rate hit 21.5% and it is rising. How bad is this? At the peak of the Great Depression in the 1930's, the U.S. jobless rate hit 25%.

Yet Europe and bond investors are telling Spain they must slash more of their expenses by laying off public sector employees, cutting the wages and benefits of the remaining public sector employees and capping the retirement income for Spain's fixed income retirees. As the jobless toll mounts, Spain is loath to cut jobless benefits and job retraining, yet that may be necessary to get a European bailout if one ever happens. What will become of Spain's needy, including their children, who knows? Meanwhile Spain's economy continues to crumble.

Why do you care? Because some U.S. and European financial institutions likely have substantial financial exposure there. If Spain can no longer pay the interest on its debts, those financial institutions may demand bailouts from their governments, meaning from taxpayers. If they don't get those bailouts and some of your money is in those financial institutions, you could lose some of that money. But it also shows you the European bailouts are unlikely to succeed despite European government assurances in the media, which send stock prices skyrocketing upward. We offer our compassion to our Spanish brethren in their suffering and hopefully we will also offer a helping hand.

Dick
To learn more about Spain's financial crisis, please see, "Benefits Run Out for Spain's Jobless," The Wall Street Journal, http://online.wsj.com/article/SB10001424052970204505304577003864242042958.html