Presentation by Dr. Xavier Sala-i-Martin, Professor of Economics, Columbia University (USA) at the Bank of Latvia conference "Economic Adjustment under Sovereign Debt Crisis: Can Experience of the Baltics Be Applied to Others?" Riga, November 2, 2012.

1. The Spanish Conundrum
Xavier Sala-i-Martin
Columbia University
Riga, November 2, 2012

2. Spain
 The 1990s Debate
 The decision: Idea of Europe
 The Bubble Years
 The Crash
 Early reaction
 Fiscal Expansion
 Fiscal Problem (even though deficit was zero)!
 Banking Crisis
 Bad policies
 No Bankrupcy: government bailout!
 Mergers
 The collapse
 The regional "problem"

3. Spain: The Problems
 Stock Problems
 Public Debt:
 Insolvent or solven but illiquid?
 Greek contagion and SPREADS
 Private (Bank) Debt
 International Debt
 Flow Problems
 Deficit
 Lack of Growth, Unemployment
 Need to address ALL of them!

4. Spain: "Solutions"
 Labor Market Reform
 Austerity measures: feedback loop into GDP growth
 Financial Market Reforms
 The June 10 Bailout
 Spain Rescues its banks
 The June 28 Bailout
 Europe's money
 Conditions:
 Evaluation
 3 categories: Solvent, Bailout, Liquidation
 Bankrupcies!
 Bad Bank: "fair price" and "no cost to taxpayer"
 The ECB will intervene to lower spreads for Spain and Italy
 June 23: "All necessary to save the euro!"

5. Today's Debates
 Rescue or not Rescue?
 Referendum or not Referendum?
 Competitiveness…

6. Other (current) Debates
 Austerity vs Growth: The Hollande Factor!
 Spending and growth
 Devaluations
 Monetary
 Internal
 Fiscal
 The NO-DEBATE!:
 Competitiveness: the WEF's GDI

7. Euro-Politics!
 Bailout fatigue in the center
 Austerity fatigue in the periphery
 The "idea of Europe" in danger!

8. THE END
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