viernes, 11 de mayo de 2012

Europe, again...

The cost of a dollar shot up from $12.96 on the first trading day of May to $13.52 a week later. No matter that the news that Mexico had a US$1.57 billion trade surplus in March (US$1.75 billion in the first quarter) had come out a few days previously.

Resurgent fears over Europe were behind the peso's sudden drop. The results of the French and Greek elections rattled investors. Concern over Spain is rampant.

Although the focus is on government debt as a percentage of GDP, Spain's problem is much more serious. Spanish government debt is "just" 70% of GDP, an almost reasonable percentage compared to Italy's 120% or Greece's 160%. The sum of Spanish banks, households and government debt comes to 363% of GDP, putting Spain third to Japan (512%) and Great Britain (507%).

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