Spain more vulnerable to credit crisis
Former chairman of US Federal Reserve says the country could be more vulnerable to a global economic downturn than rest of Europe because of the big real estate bubble.7 April 2008
MADRID - Spain could be more vulnerable to a global economic downturn than other European countries because of the frenzy that overtook the construction sector in this country, said Alan Greenspan, the former chairman of the US Federal Reserve.
"The real estate bubble in Spain has been bigger than in most European countries, certainly bigger than in the United States. In this sense, one would presume that there is greater vulnerability," said the 82-year-old economist, who was in Madrid promoting the Spanish edition of his book, The Age of Turbulence: Adventures in a New World, which has just appeared in bookstores in Spain.
"But Europe as a whole is working as a single unit, and as a result the entire euro zone is moving more or less in the same direction," said Greenspan, adding that Italy also has its own share of problems, although Germany and France are doing well in the face of the crisis.
Greenspan, who was at the helm of the Fed for 19 years, has recently been criticised by other economists for being partly responsible for the US subprime mortgage crisis and its consequences, including the real estate slowdown, which in Spain has led to a significant decrease in construction activity and a heavy loss of jobs. In the past, the construction sector spearheaded economic growth in Spain.
"Consumer spending fuelled the economy after September 11, and it was housing that fuelled consumer spending," the former Fed chief says.
[El Pais / Jose Manuel Calvo / Expatica]