http://www.zerohedge.com/news/2013-02-18/chart-day-spanish-debt
Chart Of The Day: Spanish Debt
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.
The EUR 146 billion increase in debt in 2012 is the equivalent of more than 14 percentage points of GDP leading to a staggering EUR 882.3 billion or 84% of GDP overall - far exceeding the government's own budget forecast of 79% and expected to rise significantly further in 2013. The last time levels of debt were this high relative to GDP Spain was recovering from war and the loss of its colonies.
At EUR 38.7 billion, Spain has never spent so much money to pay only the interest on its debt, 33% more than budgeted for last year. Despite the apparent Draghi-inspired truce that investors appear to have agreed with Spain's bond markets, the average interest expense remains 4.1% and as one economist put it, Spain fails in all the variables that serve to stabilize the debt: its economy does not grow, its pays a relatively high interest rate, and has a primary deficit (prior to payment of interest on the debt); unless this situation is corrected, this "is a dynamic that eventually leads to non-payment," especially as the nation's unemployment surges and GDP shifts from recessionary to depressionary.
Still think Europe's crisis is over?
and...
http://globaleconomicanalysis.blogspot.com/2013/02/spanish-debt-grows-by-146-billion.html
Sunday, February 17, 2013 1:21 PM
Spanish Debt Grows by €146 Billion, Largest Ever Recorded; Debt-to-GDP Highest Since 1910
Proof there is no rebalancing in Europe is easy to find. For example, El Pais reports Spanish Debt Grows by €146 Billion.
What follows is a Mish-modified translation of the above Google-translation.
Key Points
What follows is a Mish-modified translation of the above Google-translation.
Key Points
- The public debt exceeded €882 billion at the end of 2012
- Debt Grew by €146 Billion in one year
- The increase in the first year of Prime Minister Mariano Rajoy is the largest ever recorded
- Debt-to-GDP is highest since 1910
- Interest expense is at record high
The Government and the Bank of Spain debt figures are chilling. Government debt broke records in 2012. In the first year of the Government of Mariano Rajoy, debt skyrocketed to €882 billion, a one year increased of €146 Billion. Never in the economic history of Spain's general government debt had increased so much in a single year. In five years, the debt has increased by €500 Billion, Debt is one of the major drags on the recovery of the Spanish economy.
Debt to GDP
The increase in public debt in 2012 is the equivalent of more than 14 percentage points of gross domestic product (GDP). €882 billion is equivalent to between 83.5% and 84% of GDP. The government had forecast a ratio of 79.8% for the 2012 budget last July, but has since revised the figure upwards. In relative terms, debt-to-GDP is at highest debt level in more than a century, particularly since 1910, when the Spanish debt stood at 88% of GDP, according to a historical IMF data.
Despite cuts and tax increases, the government of Mariano Rajoy has been unable to significantly reduce the gap in the public accounts.
Skyrocketing Public Debt
click on chart for sharper image
Outstanding liabilities will probably exceed 100% of GDP at the end of the year, and there are more than €100 billion of a government debt in the hands of others (Social Security mainly). The €882 billion figure also does not include about €60 billion of debt owed by public enterprises.
A Troubling Context
To Emilio Ontiveros, president of Financial Analysts International (AFI), "the main problem is the payment of interest, because it is the most unproductive spending item possible and occurs in a country that has had to cut back in other areas and need to recover growth."
Spain had never spent so much money to pay only the interest on its debt: €38.66 billion. Financial expenses for the first time in history exceeded staff costs. "If you do not grow, you cannot pay your debts," said Ontiveros, who argues that Spain should have requested the bond purchase program prepared by the Bank Central Bank (ECB) to cut interest paid on Spanish debt markets, a mechanism for which the Government should ask before rescue its European partners. "The corollary of this is that Spain needs urgent measures aimed to reduce this expense," he says.
The average interest paid by the state's debt is 4.1% with an average maturity of 6.1 years, but this level of return that investors demand may grow by the economic downturn. Despite the truce that markets have given Spain, political tensions rose in Spain and Italy .
Jose Carlos Diez, chief economist Intermoney, warns that Spain fails in all the variables that serve to stabilize the debt: its economy does not grow, it pays a high interest rate and has primary deficit (prior to payment of interest on the debt). "This dynamic eventually leads to non-payment," he reflects.
End-Transalation
Note that last comment by Jose Carlos Diez, chief economist Intermoney "This dynamic eventually leads to non-payment."
Indeed!
More on Non-Rebalancing
Many economists see signs of stabilization. I see signs of delusion in economists.
- Germany Rebounds but ... France Economic Implosion Accelerates; Record Decrease in Service Employment in Italy
- German Trade Surplus Hits Five-Year High; Rebalancing the Wrong Way
- Illusions of Stabilization
- Europe à l’Hollandaise; Socialists Who Wrecked France, Demand the Same for Rest of Eurozone
- Wealthy French Eye Belgian Tax Breaks (Everyone in France Should Do the Same)
Mike "Mish" Shedlock
http://elpais.com/elpais/2013/02/17/inenglish/1361130613_556418.html
“White tide” of health demonstrations spreads from Madrid to 15 other cities
Thousands of medical professionals and healthcare users take to the streets
Protestors take to the streets to demonstrate against health cuts in Barcelona on Sunday. /MARTA PEREZ (EFE)
The “white tide” is spreading across Spain. For the first time on Sunday, 15 other cities, including Barcelona and Valencia, joined Madrid in staging street protests over cuts to public healthcare.
For the fourth time this year, thousands of medical professionals and public healthcare users marched on the streets against austerity policies that have seen nearly seven billion euros axed from central and regional health budgets in the last three years.
In Madrid, protestors also chanted against the regional government’s plans to privatize six hospitals and 27 local health centers.
“Public services are being dismantled, and if we don’t do something about it, we have a lot to lose,” said Raquel Diezma, 37, a nurse at a health center in Getafe.
After converging on Puerta del Sol, protest leaders read out a message promising new marches in defense of the system.
Madrid Health Commissioner Javier Fernández-Lasquetty said he will go ahead with plans anyway, because it will save money. “The march is an attempt to keep stretching out a conflict to the benefit not of the citizens or society or public health, but of those who want to keep playing a role or have a banner to wave,” he said.
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http://elpais.com/elpais/2013/02/17/inenglish/1361131056_925972.html
Iberia strikes will see more than 1,200 flights canceled
Airline staff plan five days of stoppages this week
The battle between the employees of Spanish airline Iberia and its bosses will begin a new chapter on Monday, which marks the first of five days of planned strikes that will affect thousands of passengers.
A total of 415 Iberia flights have been canceled this week, 40 percent of the total number scheduled. But the work stoppage will also affect travelers on other airlines, such as Vueling, Iberia Express and Air Nostrum, whose handling services are supplied by Iberia. That will mean another 807 flights will be canceled.
The company has come to blows with its workers over plans to sack 3,800 employees, as well as to cut salaries and reduce its routes by 15 percent.
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