Mainstream Media Parrots Spain’s Dodgy Numbers

Spain’s Pain Seen Intensifying as Slump Deepens Plight – Bloomberg.

This article repeats the Spanish finance ministry (SFM)claim that the country will have run a 4.77% budget deficit for the first three quarters of the year. This number is fictional. Here are some other reports:

  1. The number was 4.04% through June. http://headlines.ransquawk.com/headlines/spain-s-central-government-deficit-jan-june-4-04-of-gdp-according-to-the-treasury-31-07-2012
  2. It rose to 4.6% by the end of July. http://www.financial-ol.com/proportion-of-gdp-the-spanish-government-budget-deficit-from-january-to-july-rose-to-4-6.html

The monthly deficit rate through the first six months of the year was .84%. July brings a mini panic raising yields on the benchmark Spanish 10 year bond to 7.75%. As if by magic, the deficit starts slimming in the face of a worsening economy. In July, the deficits rose only .56%, which is a full three tenths of a point off the year’s pace.

In August and September, it rose to 4.77% for a rate of .0085% each month. This is a tenth of the rate for the first six months! The Spanish Finance Ministry expects us to believe that its budget was almost balanced for two straight months during a depression with over 25% unemployment.

If you extrapolate 4.77% to the end of the year, you get a budget deficit for 2012 of 6.36%, almost exactly the revised 6.3% forecast. This would be the first time in the history of the eurocrisis that a distressed country has met its deficit target. Coincidence or lie, I’ll let you decide for yourself.

In the meantime, where is the media? Are there any more Woodwards and Berntsteins out there looking to expose  government lies? It seems that the media are content to report what they are told without any critical analysis.

When one of these periphery countries defaults, no one should act like they were surprised.

dareconomics.wordpress.com

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