Spain will cure its debt-illness with more debt

 

Spain is planning to increase its public debt to a record high of 79% of GDP, up from 69% last year. Doing this in a period of high interest rates means the budget will explode in next few years, due to interest payments. This will make even more difficult to meet the 3% deficit target. Spain obviously do not understand that the deficit and the debt is the problem and it is not the decision. 2 months ago the new prime minister decided to increase the 2012 deficit much over the negotiated with EU partners. But in fact it's not a matter of partners, but a matter of Spain. It is about its future. Long years of deficits and business overregulation has led Spain to the current stalemate. And now they continue to look for a salvation in the same direction. What do the Spains rely on? How they will attract investors with higher deficit and higher debt? What will make Spain with 79% debt more attractive than Spain with 69% debt? May be the government relies on investors' madness, that will make money to pour in Spain at a dreamy 3% interest. No such fools I think...

Dobri

 

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