Spanish public debt hits record high

LAST UPDATED: 14 Sep, 2012 @ 14:52
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Spanish public debt hits record high

PUBLIC debt in Spain has hit a new record high.

New figures from the Bank of Spain show that for the first half of 2012, public debt comes in at 75.6% of Gross Domestic Product – the highest it has been in a hundred years.

It is not good news for those affected by the rafts of cuts and tax increases brought in by Prime Minister Rajoy to address the economic crisis, which have caused thousands to take to the streets in protest.

While Rajoy has not confirmed it will be necessary, economists believe Spain will soon request that the European Central Bank purchase its bonds.

Today the government to attend an informal meeting to discuss the details of such a rescue, and negotiating hard to try and ensure European does not demand it makes more cuts.

Meanwhile Andalucia is preparing to ask the FLA for a rescue of around €2.4 billion, and the Junta is said to be requesting the conditions of a bailout before it makes a formal request.

The Spanish government has promised its regions will meet their public deficit target of 1.5% of total economic output this year.

“The regions are on track to meeting the public deficit agreed by all of them,” said budget minister Cristobal Montoro.

11 COMMENTS

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  1. Politicians realise there might not be enough money to cover their wages let alone the salary increase they want to award themselves. Politicians will request the “bailout”. More debt will get added to the books, politicians will continue to get paid the most before anyone else, vast sums will disappear down a black hole, they’ll announce cuts will have to be made, to everything except their salaries. The bailout money will evaporate, more money will be requested, that’ll be refused, Spain will be bankrupt. Politicians will continue to collect their salaries. The only thing that will change is everyone else will be even poorer.

  2. Stefanjo – “Bailing out a boat with holes in it is quite pointless.”

    Not to be argumentative just for the sake of it (ok I am actually) – if your boat has holes in it then you definitely should be bailing. Usually with an automatic bailer pump and/or a redundant hand bailer (scoop). A lot of the time you can make it back to land even with a large hole.

    You’re right about the financial metaphor though. You definitely don’t want to go back into the water with the same hole in your craft and rely on your bailer. That seems to describe feeding more and more money into a broken system.

    Also don’t smoke on board and wear a life jacket.

  3. So if a bail out is pointless (and you are probably right Stefanjo) what is the alternative? For the ship to sink? Which means leaving the euro and devaluing the replacement currency (peseta?) Inevitably that will put the Spanish economy back years, but to a point that it can start to rebuild. The current death by 1000 cuts (literally) is just delaying the inevitable and prolonging the pain. In January 2008 £1 bought €1.44; in January 2009 £1 bought €1.04 – a massive appreciation of the euro, or depreciation of the pound. Whichever way up you look at it, a €2000 euro holiday went up from £1390 to £1923 in 12 months! If Spain had the option to devalue in step with the UK at that time for example, it would be in much better shape today, than being tied to Germany (through the Euro) with a radically different economy. QED, Spain should leave the euro.

  4. stefanjo/steve,
    your forgetting whose idea the Euro was – the political parasites. Their egos cannot admit to failure, what semblance of democracy existed before it’s introduction is dribbling away round the S bend.

    A really stupid Japanese American wrote a book – The End Of History – what a moron.

    What we are witnessing is the End Of Politics in the west. 2008 terrified the scum that floats to the top, hence QE – if the peasants stop buying then Anglo/Saxon capitalism is dead overnight.

    It really does’nt matter if Spain is in the Euro or revives the peseta – they cannot compete. Virtually all the successful companies in Spain are in fact foreign owned. As western contraction takes place, those same foreign companies will close down their operations and retrench to home base.

    Hate to say it but much the same scenario for the not united kingdom. Sooner or later (and it will probably be sooner) the local and international criminals/bankers in the city of London will have their wings clipped and then?

  5. These politicians see THEIR light at the end of the tunnel.
    They have proved to be incompetent, some corrupt, don’t relate to the Taxpayers (Spain, UK, etc) but still get paid well with liberal expenses + pensions.. and then can become Members of the European Commission after they fail in their home country.
    A nice job… if you can get it. Didn’t Tony Blair try?

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