When the crisis began, excess private-sector debt was the central problem. Now Spain's public administrations are the only onces increasing their debt load.
Companies and families have cut back their spending with success, evidenced by the fact that they are relying less on debt than they were. In April financing levels fell to pre-crisis lows. Falling consumption and difficulties in getting credit are the two main causes, to be sure.
Under these circumstances, consumer confidence will not increase. Instead, consumers will lower their expectations for jobs and the economy while dried up credit markets continue to plague companies. This is a viscious circle that EU leaders need to break as they work with the European Central Bank to create measures that facilitate credit access.
