The Pain in Spain

I was reading an interesting article about the Spanish crisis and how bad it is. Here is the introductory paragraph. 

Beleaguered Prime Minister Mariano Rajoy just broke another record. As if a plague of corruption scandals was not enough, Spain's debt-to-GDP has now reached levels not seen in over 100 years. As El Pais reports, Spanish debt levels rose at an alarming EUR 400 million per day in 2012 making for the largest annual increase in debt in the nation's history - all the while proclaiming austerity.

Several thoughts came to mind as I read this article. The first was that those that are against austerity do not have a viable alternative. The second is that there has been no real austerity anywhere except Estonia. It is not that I am I favor of austerity, it is just that there is no viable alternative. 

The final thought was the most disturbing. Look at the chart on the right from the article. It shows how rapidly the debt is growing in Spain. It is now 84% of the Gross Domestic Production (GDP). This is shockingly large. The last time it was this large there was a huge crisis. I assume that debt was repudiated in the 1880's in Spain. What can't continue, won't continue. (Note that it is only public debt. Private debt and unfunded liabilities from the banking crisis needs to be added to this to get the total debt picture.)

More Riots in Spain? 84% is way too large to be sustainable. 

What is the public debt to GDP for Japan? 230%. What is the debt to GDP for the US? 105%. What is the debt to GDP for Russia? 9%. Who won the Cold War? (Note that the Wikipedia article is out of date as the Spanish situation is deteriorating rapidly).

Remember, what can't continue, won't continue. The example of Japan shows that the US has some time remaining. Will that time be squandered?