Friday, May 20, 2011


Portugal, Ireland and Greece are all sad stories, but, because of its size, the real atomic bomb in Europe is Spain. This is bad news indeed for the Continent.
MADRID—Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.

Five months ago, a government change in Spain's Catalonia region revealed a budget deficit more than twice as big as previously reported. Now, a growing chorus of economists, local politicians and business leaders say that new governments are likely to discover, as Catalonia did, piles of "hidden debt" owed to health clinics and other suppliers.
Elsewhere, it was reported that Spanish bond yields have jumped. Having a lot of debt makes you fragile. Increases in the interest rate you pay on your debt have larger and larger effects as your debt level grows.

Bad medicine, this.


Jeff Burton said...

Our foreign exchange student last year was from Spain. On one hand, I feel bad for her, because she is facing a crummy future, and she is a great kid. On the other hand, she exhibited all the opinions, which when implemented, led to this present crisis.

Rose said...

yeah, I have stopped feeling sorry for people who voted this disaster in in our own country. Same for the other countries.

I used to worry about what kind of world I was having kids into - what we would be leaving for them. Watching them bite, hook line and sinker into Obama's poison apple, I have concluded I must acknowledge that they now bear the responsibility - despite my best efforts, they have voted this upon themselves.

God, help me, I hope we can fix this in 2012. A strong America will help stabilize the other countries, too.