Starving Spain

While US Treasury sales are going well, Spanish debt is languishing.

Standard & Poor's has threatened to strip Spain of its coveted AAA rating as country's budget deficit explodes, offering the clearest warning to date that even wealthy states are running out of room to borrow.

If you think there isn't a lot of money out there to borrow right now, just wait until Mr. Hope and Change and his Congress get started. They're going to gorge themselves on money desperately needed by countries like Spain. Here's some more.

Michael Klawitter, from Dresdner Kleinwort, said Spain was now crumbling on every front. "Tax revenue is collapsing. There is a banking crisis and a massive deterioration linked to housing. It is arguable that Spain has already let matters go past the point of no return," he said.

The Spaniards haven't been particularly profligate. Their public debt is less than ours.

Europe's bond supply will reach €765bn this year, up 15pc from 2008. It is far from clear whether the markets can absorb so much debt. Although Spain's public debt is modest at under 40pc of GDP, this may not prevent a downgrade.

Why is Spain in crisis? Because money is rushing to find safety in US debt and Pelosi, Reid and Obama are flooding the world with that debt. Anyone who thinks that Barack Obama will be good for the US image across the world is fooling themselves. It won't be long before the European MSM picks up on this story and starts running front page tales of America starving them of funds.

Reid, Pelosi and Obama work hard to improve the American image all over the world.