Fighting With Spanish Windmills, Or How Spain's Debt/GDP Ratio Is Double What Is Reported

Tyler Durden's picture

From Mark Grant author of 'Out of the Box and Onto Wall Street'

Fighting With Spanish Windmills

When I first attempted to find a more realistic debt to GDP ratio for Spain, Belgium, Italy et al I did it on a stand-alone basis; no inclusion of their European liabilities. When I approached Germany, given their size and importance in the EU, I focused upon their liabilities to the European Union. Several institutions have since asked me to consider the total liabilities for each country as every nation in the European Union has national debts as well as debts for their percentage of ownership for the EU and the European Central Bank. Using the combination of national liabilities and any nation’s percentage of EU/ECB liabilities one then could ascertain a final and complete picture of a real debt to GDP number that, unlike the Eurostat data, would be inclusive of sovereign guarantees, contingent liabilities and their responsibilities to the EU and the ECB. This schematic then would tell each of us what a given country actually owed so the total reality could be assessed for judgment.  Given that Spain is currently in focus and that nowhere that I have ever seen has there been an accurate national debt coupled with Spain’s European debt schematic; I have decided to provide you one.

“What I said about the economic side of the Inquisition supplies an explanation which will occur at once to the reader. It was a question of the division of the spoils. Sixtus IV and his successors greatly disliked the Spanish Inquisition because all the confiscated wealth remained in Spain. The Popes raised a little by receiving at Rome appeals -- those humane and beneficent appeals -- from the sentences of the Spanish Inquisitors, and remitting penances for a money-payment. But the Spaniards retorted by refusing to recognize the Pope's dispensations, and there was an unholy struggle.”

                                          -Joseph McCabe, The Story of Religious Controversy

The Data

Spain’s GDP                                                $1.295 trillion


Admitted Sovereign Debt                                 $732 billion
Admitted Regional Debt                                   $183 billion
Admitted Bank Guaranteed Debt                     $103 billion
Admitted Other Sovereign Gtd. Debt               $ 72 billion
Total National Debt                                         $1.090 trillion


Spain’s Liabilities at the ECB                           $332 billion
Spain’s Cost for the EU budget                       $ 20 billion
Spain’s Liabilities for the Stabilization Funds   $125 billion
Spain’s Liabilities for the Macro Fin. Ass. Fund $ 99 billion
Spain’s Guarantee of the EIB debt                  $ 67 billion
Spain’s Total European Debt                           $643 billion


Spain’s National and European Debt                $1.733 trillion

Spain’s OFFICAL debt to GDP Ratio                     68.5%

Spain’s ACTUAL Debt to GDP Ratio                  133.8%

“Yes, they have tricks up their sleeves and multiple methods of presentation and by multiple people. Yes, they give us an illusion with the appearance of truth but we are better than that and far smarter than they have calculated. I give you truth without illusion and regardless of their contentions; we can differentiate between reality and the fantasy that they weave for their own dark purposes.”

                                                                -The Wizard

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RussellChester8's picture

my friend's sister makes $74/hr on the computer. She has been out of a job for seven months but last month her check was $17871 just working on the computer for a few hours. Read more on this site ....

Stoploss's picture

Spain's going to be a royal pain.

Vampyroteuthis infernalis's picture

No big deal. It is just 10 times the size of Greece. ECB can turn the printers on overdrive.

Zero Govt's picture

the socialists have ruined/bankrupted Spain, along with the banking-property sector, so the right wing (Church and politicos) will probably finish off the job

there is no political solution, politics is the problem

tocointhephrase's picture much would you pay to protect your wealth? Got physical?

Stuck on Zero's picture

Are there any assets to add in there?  Such as receivables, holdings of bonds etc.?  Spain holds $23.5B in US notes.  Lets see a little GAAP in action.

americanspirit's picture

Those would be non-hypothecated assets I presume?

Nussi34's picture

For Spain the kex point is private debt. They build apartments like there is no tomorrow. The private debts is what is gonna kill them, if it hasn´t already...

Sockeye's picture

I agree.
(Crushing household debt and lots of condos in Canada too.)

Flounder's picture

El rendimiento del bono a diez años español está llegando a ser muy atractivo En?

GSPG10YR : 5.488% !!

machineh's picture

Cuando se alcanza al 10%, usted será un millionario! (omitiendo las perdidas en precio)

Se llama 'el camino griego a la riqueza.' Jejejeje!

Flounder's picture

No puedo esperar. Así que tengo que ir para mí. Lo cual es bueno.

Don Diego's picture

Mark is  too kind, there is no way Spain’s GDP is still $1.3 trillion, it has barely dropped since 2008 and in the meantime the Spanish economy shed 2 million jobs.

HelluvaEngineer's picture

looks like the VIX is being actively managed again today

Zero Govt's picture

your Tax form has to be honest and truthful, yet every Govt statistic (and statistician) is a pig-faced lie and every 'consultancy' or Govt 'expert' is so crooked you'd swear they get them direct from prison

there's never been an institution in history so rotten to the core as that socio-economic cancer we call democratic Govt ...time for a complete change, let's try freedom as apposed an institutional monopoly, hey it might just work (unlike Govt)

Vince Clortho's picture

Club Fed To-Do List:

1.  Print 1.733 Trillion and "loan" it to Spain.

2.  Declare Spanish Debt issue solved.

3.  Have shill journalist write another fluff piece on the genius of Bernank.

4.  Party on.

Zero Govt's picture

Yes Bernanke threw counterfeit money at the bankrupt banks, then threw more money at the bankrupt US Govt

one wonders why any journalist would think this uber-simplistic (village idiot?) problem solving is an act of genius or that of a hero??

Print.... Print ....Print ....Print any other ideas Bertwanke???

Schmuck Raker's picture

Does this run-down include TARGET2 debt? I'm guesing not.

"According to a Banco de España release, TARGET2 liabilities increased to around €176bn in January from around €151bn in December."

That's a pretty large chunk of change.

Bob Bercy's picture

Before we get toooo carried away gurantees and contingent calls are not quite the same as a debt, but as everyone knows, the real debt situation is worse than the declared amount. Interestingly Spanish Real Estate is a blast at the moment. The banks have set up websites to try to offload their stacks of reposessions. In Valencia, a charming seaside city on the Med, you can buy perfectly decent appartments for around USD90 per sqaure foot and really good ones at around USD120...(that's down around 80% from the peak asking price in 06/7) and its nicer than Miami! The food is better, the weather is better, the drinks are cheaper and the people are more friendly....only downside is the girls aren't as pretty and it's marginally more difficult to buy crystal meth on the street corner...

Sandmann's picture

gurantees and contingent calls are not quite the same as a debt


In an era of poor collateral they are.

oogs66's picture

Right, it depends on what was guaranteed. If they gty US treasury they are unlikely to have to pay. If the gty a region that is running massive deficit then they will likely have to pay.

AcidRastaHead's picture

Beware of Spanish dark purposes!

vh070's picture

Dang, if this goes on I'm going to have to buy a finca in Palma.

Sandmann's picture

You can save Banks or you can save Households - you cannot do both.

bobbydelgreco's picture

the point here is this! & 1 still don't see why you zhers don't get it ben can never out devalue a world this messed up in the end the only thing left is the dollar (not pms) its not right but the world is never right if your so stupid to think that right wins in the end then you don't understand history is written by the winners

DeficitAlchemist's picture

134% amateurs... the US with their Unfunded liabilities is 500%+...

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