Friday Night Tape Bomb: Spain Hikes Budget Deficit From 8.5% to 8.9%

Tyler Durden's picture

Just when we though that nobody would take advantage of the cover provided by the epic flame out of the FaceBomb IPO and the ongoing market crash, here comes Spain. Because there is nothing quite like a little Friday night action following a market drubbing and an "IPO for the people" shock in which to sneak the news that, oops, sorry, we were lying about all that austerity. Because while it came as a surprise to the market back in December when Spain announced it would post a 2011 budget deficit of 8.5% instead of the previously promised 6%, the market will hardly be impressed that Spain actually overspent by another €4.2 billion, to a brand new total of €95.5 billion of 8.9% of GDP. So Monday now has two things to look forward to: the Spanish bond margin hike on one hand courtesy of LCH.Clearnet earlier, and the fact that despite spending even more than expected, GDP growth has disappointed and the country is now officially in a double dip. Hardly what the country with the record wide CDS needs right now.

From Reuters:

Spain was forced to revise its 2011 budget deficit upwards on Friday, after three of the country's regions restated their own figures, exposing the struggle the autonomous communities have had curbing spending even ahead of deeper cuts this year.


Spain said its 2011 public deficit now came in at 8.9 percent of gross domestic product, up from the 8.5 percent initially stated. The country had already widely overshot its deficit target of 6 percent for last year.


The country's treasury department, which disclosed the new figure late on Friday, said Spain was sticking by its 2012 budget deficit target of 5.3 percent of GDP, despite the setback with last year's numbers.


The move came after three of Spain's 17 regions - Madrid, Valencia together with Castilla and Leon - earlier revealed in their budget plans for this year that their own 2011 budget deficits were higher than initially stated.


The central region of Madrid said it finished 2011 with a deficit of 2.2 of gross domestic product, rather than the 1.13 percent it had initially released. Valencia's budget deficit came in at 4.5 percent at the end of 2011, instead of 3.78 percent.


Castilla and Leon's deficit was also slightly higher than previously stated.


The three regions are among the most important in Spain - Madrid is the second largest by GDP, and Valencia the fourth.


Though the autonomous communities have already struggled to rein in spending, deeper cuts now loom, after the central government on Thursday approved their plans to cut spending by 13 billion euros ($16.54 billion) and increase revenue by 5 billion euros.


Of the 17 highly-devolved regions, only Asturias, in the north-west of Spain, had its budget rejected, meaning it will have to present a new one for approval.


The communities' commitment to savings this year will be crucial for Spain to get its overall budget on track.


Fitch said on Friday the government's approval of the regions' budget plans was positive, adding that the willingness of autonomous regions to pass structural reform had increased, but warned there was still a risk they could yet miss 2012 targets.


"We ... expect the central government to put considerable pressure on the regions to cooperate," the rating agency said. "Nevertheless, in the current economic context we consider that there is a risk that potential reforms might have a limited impact on 2012 accounts."

In other words, more rating agencies, downgrades, which as we explained a month ago means that if all rating agencies have Spain at BBB+ or below, the ECB will demand another 5% collateral for bonds posted as repo. Add that to the toxic spiral of LCH bond margin hikes, and things start to look rather bleak.

But saving the best for last:

The change comes as Spain is racing to restore confidence in its banks
and reassure investors spooked by euro zone fears that it can meet
ambitious spending targets.


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Soul Train's picture

but, but, but, - maybe Facebook can save us.

Will Suckers load up on on FB next week?

fourchan's picture

oh damn, lol im glad i got even shorter on this toasted crack credit addicted market today.

i cant wait until monday for the next stab southbound.

tallen's picture

Maybe 2012 will be the year the world ends afterall, the financial world. About time too.

Get your shorts ready! It's time to go diving.

Dr. Engali's picture

If things move too fast the profits from your shorts might get Corzined.

Elwood P Suggins's picture

Get your shorts ready! It's time to go diving.


Dumpster diving?



Global Hunter's picture

I was reading right here on ZH earlier that 200mm squids withdrawn from Santander PLC UK banks today, but wait the UK bank is seperate from the Spanish Santander Bank so at least they got that going for them.  

Winston Churchill's picture

If those assetss haven't been corzined,or re-re-re-re hypoed.

There is NOTHING a banker will not do to keep their power.

midgetrannyporn's picture

50% unemployment among Spain's youth but the bankers want austerity. Sick mofos.

Zero Govt's picture

We need austerity ...a complete roll-back of Govt because those suckers are precisely why there's unemployment

Govt does not create employment, it destroys it by taxing (thieving) the productive capital out of the private sector

what part don't you understand mate?

greensnacks's picture

"Govt does not create employment, it destroys it by taxing (thieving) the productive capital out of the private sector"

I guess Boeing, Lockheed, General Dynamics, Northrop Grumman, Textron or Raytheon doesn't count.

Dr. No's picture

The gov had to steal that money from someone to redistribute to Boeing, GD, NG, ext.  If I could have kept my money I would have spent it on something else.  They didnt create jobs.  They stole money from me to redistribute.  Boeing etal are suckling at the teat.

greensnacks's picture

Taxes create jobs in the private sector - that was the point. It's too bad you don't get to decide how your money is spent, but I'm pretty sure commercial aviation would be non-existent and there wouldn't be this internet those kids are talking about. Smartphones? what futuristic picture film did you see that on?

mjk0259's picture

1930's? Almost no tax. Not many jobs either. Most econ's agree massive govt spending for the war turned the economy around. Otherwise, we would have been Marxist.

Turin Turambar's picture

Hey Einstein, at least defense spending is authorized in the Constitution.  None of the other cradle to grave crap is.

LeBalance's picture

standing armies are more dangerous than....

decon's picture

"...what government gives it must first take away..."

John Coleman

hedgehog9999's picture

I 'm sorry but the proper technical name is Robernment which is what all these buffons around the world are, from Europe to the Americas to Asia whereas Africans have been doing that as well as they were liberated from their colonizing robernments in Europe...




midgetrannyporn's picture

Bullshit. Without social programs the 1% would own it all and everyone else would starve to death. Even you suckle at the gubbermint teat. There's no way in hell you don't. YOU GOD DAMNED SOCIALIST!

smb12321's picture

Get some help with anger management issues.  I can understand getting a little heated but venting like a madman over a casual comment in a damn blog is a little too much.  Calm down, get a drink and take in a movie.

boogerbently's picture


We think the rest of the world needs "austerity", but we need more spending!

Joe The Plumber's picture


If the rest of the world accepts austerity we can continue to have a deficit without tears

As the only source of marginal demand and marginal credit expansion we become the liquidity providers in a deflationary world

disabledvet's picture

You need SOUND MONEY. In the USA when we had a gold standard and we went to war against Spain in Cuba and the Phillipines "it cost the American people a telephone tax." Now look how government responds! "DIE, GREECE, DIE!" Ridiculous. "this is not an austerity you can win." Get RID of the money printers at the ECB! YOUR MONEY IS IN GERMANY NOW!

CrashisOptimistic's picture

All money is printed.  Whether it is stamped onto a gold coin or onto paper doesn't really matter.  It's just a human invention.  Its value is entirely perceived and does not exist in nature.

That being said, "printing" is not evil.  All of it is printed.  Excessive printing is where there is a problem, and as mortgages default and cause a disappearance of assets from the "system" ( or if you don't want to think that mortgages are an asset then think of it as collapsed real estate value as the lost asset), it's credible to suggest that printing is replacing money, not adding to it.

That's why no hyperinflation.  It's not adding money.  It's replacing it.

James_Cole's picture

Nice to see a sane comment on here!

smb12321's picture

You are so right.   The State can dole out salaries but it cannot create wealth (because the money it spends is either borrowed or taken from someone).   It can redistribute monies but it cannot create prosperity (because prosperity is not the same as buying things with money stolen from future generations). Austerity is now THE issue for the Left but not for the reasons stated.  It is opposed so rabidly because it directly weakens the State.

A regime with less money is also less powerful.

mjk0259's picture

Suppose the state taxes all income at 1% and uses the money to pay doctors to provide basic medical care for low income people that could not otherwise pay for it. Citizens overall are more healthy, more productive. Does that not create wealth? It seems to in lots of countries.

mjk0259's picture

Internet? Interstate highways? Satellites? GPS?

Does not the state create wealth when it standardizes things like electical power distribution, telephony, food processing, etc.

oldman's picture

@zero govt

We sat at the table together

We had a wonderful meal

We had coffee and the chocolate cake covered with vanilla ice cream

We laughed

We sang

And now here is the waiter with the check

But none of us want to pay

What to do?

Oh my, What to do?

I agree with you, of course, but the meal and the times we had were worth something

Were they not????

Have another cup of tea, Zero?                      om

Joe The Plumber's picture

So why do I have to pay for all our fun? Why do some of you have so many excuses why it is unfair if I dont pay for all of your fun?

zippy_uk's picture

Well - the meal has been had, so taxes (and spending cuts) have to be had to pay for it.

My questions are:

1. Would it not have been cheaper to go to McDonalds ?

2. Did I even get a share of the meal in the first place ?

3. Did anyone ask me a) If I wanted the meal in the first place b) What I actually wanted or c) If I could actually afford it ?

I object to having my future income taken off me without my permission for something I probably did not even benefit from. My future income can now not do it part in proping up the real economy in the future.

I think this is ZeroGovt.s point

oldman's picture


A green from the oldman because that was my first question, also.

My response to the rest is that since you still are living 'among them'----you don't get a choice, just a vote.

If you live out here with some of us who didn't want be a part of that 'system' of managing human behavior---you have truly made YOUR choice without having voted and are a do-nothing dude by default.

Welcome to the club, zippy!!!

Just remember that being free is a heavy responsibility that only 'the one' can carry.

But then, this really is all about 'the one', after all------(no one will understand this comment as I intend it)

this oldman did not wait to be asked                       om

smb12321's picture

First, how will building more debt aid those unemployed youth?  Second, Eur has been pulling a California - increasing budgets annually despite mounting deficits. Real cuts occurred in a few states in the last couple of years but this was coupled with large tax increases.  "Austerity" is only a problem in Europe because the State has evolved into the major player in the economy with greater and greater percentages getting state help in some way or another. If it was limited in scope, austerity would never be an issue.   

Global Hunter's picture

Jesus I'm going to be on edge all weekend somebody in power may blink and chose the nuclear option

Paul Atreides's picture

I could picture Nerobama hitting the 'BIG' red button if the people turned on him. He is the kind of psycopth that would risk total annihilation of the earth just to keep him and his banker buddies in power. You can see it in his marxist Kenyan eyes.

carbonmutant's picture

They've been taking lessons from the Greeks...

These two are going to sign a trade deal with each other... once they're out

greensnacks's picture

Jerry Brown issued the same press release.

Zero Govt's picture


chuckle.. and we have Fadebook.. how about Flopbook ...and Facedropped ...and Facefu**d better not!!

disabledvet's picture

i coined that when they pulled the IPO in January. I demand attribution! (I also used included i might add. Captain Picard actually...

zebra's picture

Bullish? Bearish?

well, let's ask Ben..


Bunga Bunga's picture

Bullish, more spending. What those defcit hawks never get into their small brains is that never choke a running Ponzi.

zebra's picture

you must be a MMTer...


Bunga Bunga's picture

Credit money is only a product of modern civilization, civilization itself has been a Ponzi scheme from the beginning.

Joe The Plumber's picture


If it is still working dont fuck with it

zebra's picture

FarceBook is actually what they mean........


Agent P's picture least 2012 will still be 5.3%.  Good work people!!!

kahunabear's picture

On another matter, anyone think this 12 down days in a row thing is a tail event of significance? Anyone's ass hanging out on this? I've never seen anything like it. Just wondering how big the bets are against it continuing.

smb12321's picture

There is nothing mystical about it.  It's attributable to bad news here and abroad, distrust and uncertainty by the private sector of this administration and fear of future events.  It does not look good because all indicators seem to point downward.  If you must invest, hedge with puts.   I am mostly cash but in 5 days my NASDAQ puts have yielded $54,000 that more than makes up for any losses in the 30% I still have invested.

I saw on Kudlow that this was the first time it's happened in 40 years.