One of the most important aspects of a Business degree is the ability to synthesize complex systems into one PowerPoint slide. For a couple of years now, the financial and political pundits have been telling us that Spain doesn't really have a debt problem thanks to their low debt/GDP ratio.
Spain, however, is a complex country with autonomous regions (Comunidades Autonomas). The interaction between these and the central government, too complex to describe here, must not be underestimated. The CCAA (Spanish abreviation) have their own budgets and their own deficits. They also have their own bonds complete with Moody's and S&P ratings.
Although the Kingdom of Spain doesn't explicitly guarantee the debt of the CCAA, one can expect that, in practice, they will when the time comes. No matter what the prospectus says.
The combined debt of the CCAA is currently at 12.4% of GDP (link in Spanish here) which is 20% higher than a year ago.
I do not know about you, but I have not seen this in any Wall Street Research about Spain. Perhaps they can find Spanish speakers in NY to read and translate the local papers.
No comments:
Post a Comment