Bankruptcy Spain: the markets will be the next victim

MADRID - José Luis Zapatero said in a recent interview that
take any measure to boost the economy even though the Spanish and
reorder the public accounts by 2013 as promised
Brussels and European partners.

The declaration is important because Spain is the fourth largest economy
in the EU and therefore has a specific gravity much higher than other
"Pigs" as Greece and Portugal. If the confidence of the markets were
befall Madrid (there was a tasting last February 4 when
the stock market collapsed in a single session of 6%) with the same intensity
which recently has affected other countries in the euro zone , for
European currency would be a disaster.

The question is then whether Spain is really a nation at risk
as from time to time seem to show the analysis of the main
international rating agencies (the long-term debt is below
observation with possible negative implications and has been cut
notation for certain savings banks) or banks. The more
that the Treasury will issue debt for this year over 210 billion
euros to cover the repayment of the due and to finance
interventions undertaken to support the economy.

"The worst - says Juan Ignacio Crespo, head of
Thomson- Reuters - is now behind us and I do not see any horizon
default. The latest releases have been good and the differential CDS
with Germany is gradually diminishing. Despite the difficulties
quotas in Spain there have never been major problems
confidence. The country is insolvent, pays on time and will continue to
in the future, so much so that maturing debt (90 billion
euros are to be repaid in 2010) is continually renewed without
Additional effort and so that it corresponds to the increase
deficit. "

According to the analyst for Thomson the Spanish economy has so 6-9 months
lagging behind the U.S. recovery, but there are signs that
the situation is gradually improving. In particular,
Juan Ignacio Crespo is important that the savings rate
of Spanish has never been so high (18%) in recent
months. But that ' inflation is contained. Two factors that
allow to look at the increase in indebtedness Spanish
(From the current 55% to 80% of GDP in three years) and the deficit (which
will be reduced from the current 11.4% to 3% in 2013), with relative
tranquility.

In reality, there are risks. The crisis caused by the outbreak
of the housing bubble, which was slow and not as sudden as
toxic products of other countries, entered the deep tissue
of a country and has expanded to other areas such as car and
tourism , but also to the bank. The figures give a picture of
everyday life are thus a million unsold homes, more than 4
million unemployed (20% of the total) that the suffering bank
grow from month to month, household debt (176% of GDP ,
McKinsey seconds) bringing the total exposure of the country
(Public and private combined) to 400% of GDP around, the decline in
industrial production (-2.5% in January). All while the accounts
public are out of control and there who doubts that can be
rimmessi in order by 2013.

Spain has risen in five years from a country virtuoso, in
strong growth, a nation with a major deficit in the EU and
one of the most marked recessions. Some say that the country did
leg and longer wheelbase that would have been better left out
euro: it would suffice a modest devaluation of
"ESP" to overcome the crisis .
But this crisis has laid bare
the limits of a model based on "old economy" strong "labor
intensive. Therefore, to overcome the conservative culture of the country,
urgently needed structural reforms at all levels: social,
economic productivity, education. Reforms that the country has the means to
launch, relying on the basics of a health system and a
pension system, ensures social welfare.

Zapatero has sensed that the stalemate can not continue and that
urgently modernize the country. The time is long, however: you need
in fact cover the current situation, which will take the next two
years of what remains of legioslatura, but especially the
political consensus. And this is the main obstacle to overcome.

Tags: Bot , Public Accounts , Crisis , Dell , bankruptcy , inflation , pensions , GDP , industrial production , Reuters , tourism , eurozone

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