Spain's new economy minister warned the E.U. that the fragile economy was slipping back into recession – barely two years after climbing out of its last economic downturn. Luis de Guindos, economy minister in the new conservative Popular Party government led by Mariano Rajoy, conceded that he expected the economy to contract up to 0.3% in the final three months of 2011 and again in the first quarter of the new year. Technically, a recession is two consecutive quarters of negative growth. Spain last pulled out of recession at the start of 2010 but is still trying to tackle the highest rate of joblessness in the eurozone of 21.5%. Its new government is committed to curbing the budget deficit by €16.5bn (£14bn) in 2012 through sweeping cuts and is expected to try to clean up banks that have been battered by loans to property companies and exposure to troubled countries in the eurozone. "This quarter the Spanish economy will surely see a downturn and we will return to negative growth," de Guindos told a news conference. "Let nobody be fooled, the next two quarters are not going to be easy either in terms of growth or employment," he was quoted as saying by the Associated Press. Spain is trying to reassure markets that it can curb its deficit to avoid being punished by investors anxious about the future of the 17 nation European single currency. Just before the Christmas holiday, the yield on 10-year bonds – which reflects the real cost of borrowing for governments – increased two basis points to 5.41% before a 7 January deadline for employers and unions to come up with a labour reform agreement demanded by the government.
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Wednesday, December 28, 2011
Spain's new economy minister warned the E.U. that the fragile economy was slipping back into recession – barely two years after climbing out of its last economic downturn. Luis de Guindos, economy minister in the new conservative Popular Party government led by Mariano Rajoy, conceded that he expected the economy to contract up to 0.3% in the final three months of 2011 and again in the first quarter of the new year. Technically, a recession is two consecutive quarters of negative growth. Spain last pulled out of recession at the start of 2010 but is still trying to tackle the highest rate of joblessness in the eurozone of 21.5%. Its new government is committed to curbing the budget deficit by €16.5bn (£14bn) in 2012 through sweeping cuts and is expected to try to clean up banks that have been battered by loans to property companies and exposure to troubled countries in the eurozone. "This quarter the Spanish economy will surely see a downturn and we will return to negative growth," de Guindos told a news conference. "Let nobody be fooled, the next two quarters are not going to be easy either in terms of growth or employment," he was quoted as saying by the Associated Press. Spain is trying to reassure markets that it can curb its deficit to avoid being punished by investors anxious about the future of the 17 nation European single currency. Just before the Christmas holiday, the yield on 10-year bonds – which reflects the real cost of borrowing for governments – increased two basis points to 5.41% before a 7 January deadline for employers and unions to come up with a labour reform agreement demanded by the government.
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Apologies to bore you with back of the envelope calculations but the simple numbers tell us all the bleedin' obvoious...
Say Italy have 2,000,000,000,000 euros in debt (2 trillion). Taking off two zero's, corresponding to 1% gives 20,000,000,000 (20 billion). S0 5% corresponds to 100 Billion euros!!!!! The population of Italy is 60 million corresponding to 100,000,000,000/60,000,000. Cancelling the zero's gives10,000/6= 5000/3 euro's for every man woman and child.Take a typical family of 2.2 (4 members) gives a family annual debt payment of 4*5000/3=6,667 euro's. Per month payment interest only wise this gives 556 euro's.What family can pay that much per month in extra debt payments to the government forever ??????? It's just not possible or realistic.
*****So the mantra that 7% is unsustainable is a fallacy that the governments are hoping the markets will swallow*******
The sustainable long term % number is soooo much more modest. Conclusion: Italy are to all intents and purposes have been bankrupt/insolvent, call it what you will, for quite some time and it is getting worse day by day.
Italy will go belly up some time soon.
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