European Policies Only Make Things Worse For Spain

Krugman is not happy with the policies imposed on troubled states like Spain. He calls Spain's current situation a depression. He argues that fiscal austerity will only worsen its depression. Bankers will not lower their interest rates to an economy that is in depression for a good reason. They want to see economic growth that will increase their ability to service the debt. He also reminds us that the bursting of Spain's housing bubble led to its economic problems. Public debt, prior to the housing collapse, was below the eurozone average. He also has difficulty understanding the central banks concerns about inflation during a recession in Europe.