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2008:2012 Spanish financial crisis - Essay Example

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In the wake of the bank failures, large reductions in the equities’ market value and commodities, and declining stock indexes, national finance ministers, financial industry players, and world political leaders coordinated their efforts towards mitigating the effects of the crisis (Pomfret 6). It is no doubt that the global financial crisis had devastating economic, social, and even political impacts across the world. Most of the European countries were greatly affected by the crisis, Spain being one of the countries that it severely hit. I was in Spain (Barcelona and Madrid) for two months recently and saw how people live there. During my visit, I found the country to be interesting. However, I felt very sad to see how people in Spain are losing all their businesses and how there is no money in the country. It is against this background that this essay will seek to discuss and understand the 2008-2012 Spanish financial crises. Spain, like many countries, has gone through a series of financial crises prior to its industrialization and after. It is important to note that there are similarities between recessions throughout Spain’s history. ...
The crisis in Spain started as an extension of the international financial crisis (Serrano 371). Nevertheless, the role of internal imbalances that accumulated in the pre-crisis period cannot be ruled out from causing and actually aggravating the financial crisis in Spain. In particular, the banking and real estate sectors in Spain have been cited to have been the greatest contributors to the deepening of the crisis in the country (Shachmurove 363). After a relatively long period of economic expansion, which started in the mid-nineties, the Spanish economy began to show the initial signs of exhaustion in 2006. This coincided with the international economic crisis that started in 2007and intensified in 2008. As a result, financial crisis in Spain hastened a situation that triggered severe imbalances’ adjustments that had accumulated during the previous years (Pomfret 10). The fast deterioration of the international macroeconomic context served to highlight the structural weaknesses that the Spanish economy had. After 2008, it became apparent that Spain economy’s dependence on property and construction development activities and domestic demand was an absolute failure. The disproportionate growth in real estate, as well as expansion of credit that was needed to finance the sector was the main basis of the economic imbalances (Shiller 40). The Main Causes of the 2008-2012 Spanish Financial Crises As mentioned earlier, the 2008–2012 Spanish Financial Crises is the worst in the last fifty years. Apparently, the crisis started due to the internal imbalances that had accumulated prior to the crisis as well as as an extension of the international economic crisis. Presently, the incomplete adjustment in the Spanish economy is making it hard for the ...Show more
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Summary

The crisis was characterized by the threat of complete collapse of large financial institutions across the world, downturns in stock markets, bailing out of banks by national governments and general slow-down in economic growth around the world…
2008:2012 Spanish financial crisis
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