Austerity Bites
The situation in Spain has not improved. Apart from the economy in free fall mood, the austerity effects are now spreading to various areas, affecting among other things the health care. From El Pais,
Despite being given more leeway by Brussels, the government has insisted the regions adhere to their target for the year of 1.5 percent of GDP. Catalonia, the region that contributes most to the domestic economy, refused to attend a meeting of the Council for Fiscal Policy on Tuesday to protest the central government’s intransigence on the deficit target, while Andalusia’s representative walked out of the meeting after saying the fiscal goals that had been set for Spain’s biggest region were unreachable.
“One of our priorities is that the liquidity crisis does not affect the public nor other levels of the administration,” the secretary of state for the budget, Marta Fernández Currás, said at a presentation of the figures. Currás said excluding the transfers, the deficit in the first half in fact narrowed to 2.56 percent of GDP from 2.63 percent a year earlier.
And the unintended consequences for people, read below.
Black Friday deja vú
With Spain having experienced a “mini” Black Friday two days ago, although people still believe this is a local problem, here we present you out favourite documentary of the “real crash”.
With Valencia insolvent, make sure to watch the other problematic regions of Spain namely; the Islands, Castilla la Mancha, Andalucia and Catalonia, as the crisis goes into phase two. Remember, just like the Asian crisis in the late 90′s, it all started as a local problem, and then became a global problem.
Video below.
Market punishes Spain while Madrid is on “fire”
The fear over Spain returned yesterday. Spain’s risk premium shot to a new record high on Friday after officials in Valencia formally asked the central government for funds to help pay the region’s mounting bills, including the high prices of prescription drugs. Yields soared and spreads exploded to 610 points over the German bund. Ibex collapsed almost 6 %. All this is taking place, while the politicians still live in total denial. From El Pais.
At first, Montoro said that he wasn’t aware that Valencia government officials had announced about an hour earlier that they would be the first region to formally tap into the Regional Liquidity Fund (FLA), a system that was created just over a week ago that allows cash-strapped regions to access financing but under stringent guidelines.
“Valencia is not getting a rescue,” said deputy regional premier José Císcar during his own news conference. “We are tapping into a mechanism of financing that more regions will be using in the coming days, but without any more adjustments.”
After first denying it, Montoro explained that the region will tap into FLA and would indeed “be obligated to follow new conditions. (full article here)
Meanwhile, Madrid is under siege by the anti austerity protesters. Espana, everything under the sun. To be continued, as the big elephant now starts moving. The question is whether Rajoy is “cutting too far and too fast’. Video below.
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