Spain

France and Spain give us a taste of what is to come in Europe in the coming decades. What comes across as a relatively theoretical exercise concerning pension levels in the distant future will become a reality within the next ten to twenty years — and not just in these two countries.

As much as one can understand why liberal economists would like to use the euro as a catalyst for economic reforms, it may result in the precise opposite. But if there is one place where a little liberal daydreaming is allowed, it is the general meeting of the Mont Pelerin Society.

If newspaper reports last weekend are to be believed, Germany is pressuring Spain to accept a European bailout. The story is all the more credible as the Spanish government has strongly denied any such bullying. Veteran Euro crisis observers remember that Ireland’s bailout began in precisely the same way.

There are growing concerns that the Iberians will be the next casualties of the economic crisis.The widening spread between Spanish securities and German bunds as well as the increasing costs of credit default swaps on Spain’s savings banks both point in the same direction. Markets are betting against Spain and its financial institutions.