Reality of Numbers Trumps Spanish Obfuscation

From ZeroHedge

From ZeroHedge

Chart Of The Day: Spanish Debt | Zero Hedge.

I told you so. For the last few months, I have been periodically visiting the Spanish budget situation. Whenever I analyzed the actual amounts of bonds sold and other metrics, I came to the conclusion that Spain’s budget deficit was much worse than admitted by the Spanish Finance Ministry.

Prime Minister Rajoy and his People’s Party should have zero credibility today in light of the massive corruption scandal recently brought to the fore, but the mainstream media has yet to report the large discrepancy among what the Spanish claim the budget deficit will be, 7.4% including bank bailouts, 9% from confidential sources within the ministry, or what appears to be the actual deficit, 14% according to the El Pais article.

How do we calculate 14%? The Spanish government issued €146bn in new debt for 2012. This figure does not include the rising amount of IOUs to government suppliers, the drop in the government’s cash position or intragovernmental loans from pension and other assorted funds to the central government.

To make matters worse, Spain will need to borrow at least €173bn to finance itself in 2013 meaning that it is less than a year away from a 100% debt to gdp ratio:

Spain Firmly Within Juncker Zone

Spain is ripe for an “aha” moment, that point in time where investors realize that they have profited as much as they could from their bond holdings and begin taking profits. Spain will default on it debt pile, but it will not be called a default. Rather, the troika will use an Orwellian euphemism to refer to the entire disaster.





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