The Rain In Spain

Tyler Durden's picture

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

The Rain in Spain has not left the Plain

It sounds good when said and credible and positive but the problem is that it is one more absurd illusion. Spain, this morning, says the next round of budget cuts are going to come from Education and Health benefits which is all very nice except they do not totally come under the purview of the Spanish Federal government. The way that Spain is currently constructed these expenditures are mostly under the control of the regional governments and so that these kinds of promises by the current administration in Spain are wisps of cultivated air floating from Madrid to Berlin. Even if the Federal government could get the cuts accomplished it will take them months and perhaps months and months so that the headlines of what Spain is going to do has all of the substance of the milky froth atop some cup of coffee in Valencia that resembles a cappuccino.

Now Spain’s GDP is projected to be approximately $1.4 trillion in 2012 and they are missing their EU mandated target by about 5.30% which is $74.2 billion in aggregate. The fantasy of Health and Education cuts only amounts to $13 billion if actualized and they are back to the standard European tricks that the rest will come from a crackdown on tax evaders, asset sales and projected economic growth which have all of the substance of Don Quixote’s windmills. In 2011 the government of Spain promised to curtail the deficits of the Regions and they fell short by 2.5% or $35 billion. For all of Spain they promised the EU in 2011 that they would shrink their deficit by 3.2% and the reality was only 0.8% after all was said and done. To understand Spain better you should know that about 60% of the regional budgets are directed at Health and Education so that the Regions would have to cut approximately 10% of their budgets to attain the $13 billion that the Federal government is calling for and I do not believe that local politics will allow for this.

To make matters worse the Regions’ debt now accounts for more than one-third of the national debt to GDP and each and every Region is now running at a deficit. There is quite a variance here from around -1.0% in Madrid to more than -7.0% at Castilla-La Mancha. There are such strong feelings in Catalonia that the Region has threatened to take the national government to court for not respecting the laws for the autonomous regions of Spain. In an amusing footnote the CEO of Spain’s largest bank, Santander, spoke this morning in Madrid and called for the ECB to begin massive Quantitative Easing and to buy both public and private debt. Everyone in Europe wants to spend everyone else’s money, not their own of course, and then not to be held accountable for it as Eurostat does not count sovereign guarantees or contingent liabilities of the nations in Europe. The ECB is owned by all of the governments in Europe of course, but tell no one; no one at all.

“Mere flimflam stories and nothing but shams and lies.”

                                                                 -Miguel Cervantes

To make matters worse they government of Spain is now directing the Spanish banks to raise an additional $65 billion in 2012 which is going to come from where I wonder. Perhaps the Spanish Inquisition Fund for the Unemployed. The unemployment numbers for Spain are now the highest in Europe for both the general population and those under 35 which now stands at almost one-half of the country’s younger people. I fear that Prime Minister Rajoy’s eminence may be of short duration.

“Spain does not need a financial bailout at this moment."

              -Spanish Economy Minister Luis de Guindos, April 10, 2012

Wait just a moment; the next one will arrive!

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GetZeeGold's picture



“Spain does not need a financial bailout at this moment."

-Spanish Economy Minister Luis de Guindos, April 10, 2012


Check the about now?


Oh regional Indian's picture

It does fall on the plain, the un-kempt, the un-worthy.

Spain is the big domino (notice how Greece has gone completely silent?), then France and then the UK..... some of saw this a long time ago. My thesis of the Iceland/Zimbabwe line and all the related 33rd parallel drama is playing out as per plan.

Greece/Portugal etc. all side-shows. The big fight will leave Rome standing amongst th eruins.

Or so Rome thinks.



Madrid2020's picture

We're too big too us the money! We've got the ECB and the Germans by the cojones,now cough. 

mr_T's picture

It's raining here and I don't have an umbrella

Vampyroteuthis infernalis's picture

Translated, we can wait a few weeks, THEN give us a bailout.

vmromk's picture

My Ponzi master has a printing press.

Miss Expectations's picture

I check out Daily Job Cuts everyday.  What seems to stand out  the most are the job cuts in Education and Health Care.

valley chick's picture

let me guess....time for yet another squid technocrat...

fonzannoon's picture

when will the aapl/gold ratio hit 1/1?

eigenvalue's picture

Spaniards are good at football.  They can organise more football clubs and the unemployment problem can be hence solved.

youngman's picture

“Spain does not need a financial bailout at this moment."

-Spanish Economy Minister Luis de Guindos, April 10, 2012

In perfect Politicial this moment he is correct..not lying....

Now how do all these politicians think they are going to survive know they are having meetings all the time to try to figure it out...and there is one guy in the room that can lay it out....cut expenses now and deep......but of course the politicians can not do that....the people will riot and probably get they sit and try to hide all the problems with lies..and bailouts......and really try to save their skins.....I bet when the forensics are done on this time...that they find lots of prepaid retirements...bonuses...future salaries paid up front as the ship sinks.... 

Village Smithy's picture

Increase class size, cancel art, music and phys. ed. do whatever it takes but make sure the squid gets its due.

tok1's picture

Spains debt to GDP is better than Japan and US. only difference the ECB will not buy their bonds.. and all their domestic savings  have gone to Germany/France.  and they cant get any currency flexibilty.. ie how would treasuries look if the FED wasnt allowed to buy the 2 tril plus they did and the currency was fixed to gold at 300 USD.. where it was 10 years ago  .. So basically Germany is driving the periferal to the wall for its own benifit.. Its sad to watch.. they should leave Euro..ASAP..

Madrid2020's picture

If Spain leaves the euro,the German econmony will shrink by 5% within 14 months. Germany is heavily invested in Spain and Italy,unlike Greece.

covert's picture

spain has had over 200 years of jihad.


Madrid2020's picture

Actually, it was more like 700 yrs.,but boy did we teach the rest of Europe a lesson in kicking m*slim ass!Reconquista Now!The first massive explusion was in 1492 the second 1609.


smiler03's picture

Useful charts but hopelessly out of date now, Spain owes Germany: 

Dated November 2011 an "interactive" chart from the Daily Telegraph ($117 billion)

Dated November 2011 an "interactive" chart from the BBC ($131 billion)