Insolvent Spain Forced To “Borrow” From Social Security Fund To Pay Pensions [zerohedge]

Spain’s slow-motion implosion into an insolvent singularity has been one of the most amusing sideshows for over a year. The chief reason for this is the sheer schizophrenic and absurdist polarity between the sad reality, visible to everyone, and the unprecedented propaganda by the government desperate to paint a rosy picture. While on one hand the economic data shows very clearly the painfully obvious sad ending for this chapter of European integration, it continues to be punctuated almost daily by such amusing confidence games as Spain’s Economy Minister de Guindos telling anyone who cares to listen that the labor market is improving “beyond the seasonal pick up” and that Q2 GDP would be close to zero (because 0% GDP is the new killing it). That’s the good news.  The bad news is that as Reuters reports, and contrary to fairy tales of unicorns and soaring 0% GDP, Spain’s government is so insolventit was just forced to “borrow” from its social security reserve to fund pension payments.

From Reuters:

Spain tapped its social security reserve fund for the second time in a month on Monday, the Labour Ministry said, to help with extra summer pension payments as unemployment and retirement costs deplete government funds.

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El Pais Article Discusses “Liberating Spain from Shackles of the Euro” [Mish]

The El Pais Screwdriver Blog openly asks “Are we to Liberate the Euro?

Here is a Mish-modified translation:

 Today Spain has reached a record number of unemployed. Although we do not like the current state of things, no one seems to know against whom to direct their anger.

Actually, we are under a dictatorship perhaps worse than the Portuguese or Spanish forty years ago because it is more subtle and works almost invisibly. And we can embody it too, not in an institution or a person, but with a symbol: the euro.

There are many reasons to believe that Spain would not be as bad off out of the single currency. To explore this question we must look at least three things: First, what is the profile of the countries that have left monetary unions? Second, what does empirical evidence tells us regarding effectiveness of countries have left currency unions? Third, what are the economic and social conditions that need to be taken into account in making such a decision?


Spain jobless rate hits new record high of 26.6% [presstv]

New data shows Spain’s jobless rate hit a new record high of 26.6 percent for the month of November 2012, amounting to 6.157 million Spaniards.

People stand in line outside of an unemployment office in Madrid, Spain. (File photo)

The European Union’s statistics office, Eurostat, released the new data on Tuesday, which showed an increase of 0.4 percent from October’s reading of 26.2 percent.

The EU’s Employment Commissioner Laszlo Andor urged Spain’s government to find a political strategy to decrease the number of people without work

Andor said he is extremely worried about the unemployment rate for the country’s youth under 25, which was reported at 56.5 percent in November 2012, a 0.7 percent increase from 55.8 in October last year.


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Huge gold imports into China/Japanese Pension funds eyeing gold for first time/Unemployment in Spain rises to 26.6%/ [harveyorgan]

Gold closed up $16.00 to finish the comex session at $1661.50  Silver also followed gold rising by 39 cents to $30.42. Today we saw gold and silver actually strength as the Dow fell deeper into the red.
Demand for physical continues to strength despite the crazy antics of our bankers. Today we witnessed a huge increase in physical imports into China through Hong Kong to the tune of 91 tonnes of gold last month. Also silver imports are rising as well.  The USA mint saw a big rise in silver eagle sales. The Shanghai physical exchange continues to show huge strength with a total monthly sales of 19.5 tonnes of gold turnover.
The bankers will have massive trouble shorting gold as turnover sales continue to strengthen each and every month.

With gold shares performing poorly despite gold/silver’s rise, expect more of the same raiding by the bankers as they try and quell these two precious metal’s demand!!

In other news, Greece again is in need of cash.  Today, the Greek banks announced that due to the Greek haircut on the bonds it held, its income was curtailed badly.  Thus the Greek banks have a non performing problem coupled with a lack of income.  The EU set aside 50 billion euros and already the banks need more than that.

Unemployment again rises in Spain, this time a record 26.6% and all of Europe has an unemployment level of 11.8%.


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Euros discarded as impoverished Greeks resort to bartering [Guardian]


Stall-holders at a bartering market in the central Greek city of Volos, where shoppers use Tem coupons to exchange services or products. Photograph: Despoina Vafeidou /AFP/Getty Images

It’s been a busy day at the market in downtown Volos. Angeliki Ioanitou has sold a decent quantity of olive oil and soap, while her friend Maria has done good business with her fresh pies.

But not a single euro has changed hands – none of the customers on this drizzly Saturday morning has bothered carrying money at all. For many, browsing through the racks of second-hand clothes, electrical appliances and homemade jams, the need to survive means money has been usurped.

“It’s all about exchange and solidarity, helping one another out in these very hard times,” enthused Ioanitou, her hair tucked under a floppy felt cap. “You could say a lot of us have dreams of a utopia without the euro.”

In this bustling port city at the foot of Mount Pelion, in the heart ofGreece‘s most fertile plain, locals have come up with a novel way of dealing with austerity – adopting their own alternative currency, known as the Tem. As the country struggles with its worst crisis in modern times, with Greeks losing up to 40% of their disposable income as a result of policies imposed in exchange for international aid, the system has been a huge success. Organisers say some 1,300 people have signed up to the informal bartering network.

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Spain to offer residency to foreign house buyers [Yahoo]

MADRID (AP) — Spain is to offer foreigners residency permits if they buy houses worth more than €160,000 ($200,000) as part of an attempt to reduce the country’s bloated stock of unsold homes.

Trade Ministry secretary Jaime Garcia-Legaz said the plan, expected to be approved in the coming weeks, would be aimed principally at the Chinese and Russian markets as the domestic demand was stagnant and showed no sign of improving. Spain has more than 700,000 unsold houses following the collapse of its real estate market in 2008.

The country’s economy is struggling and is currently in recession with 25 percent unemployment. Thousands of houses have been repossessed by banks and their owners evicted because they cannot pay their mortgages. The government last week approved a decree under which evictions would be suspended for two years in specific cases of extreme need.

The country’s offer beats others in bailed-out countries such asIreland and Portugal, where residency papers are offered to foreigners buying houses worth more the €400,000 and €500,000, respectively. It was not immediately clear if the residency would only refer to Spain, and not the European Union.

The stricken state of the country’s real estate market was highlighted Monday by figures from theBank of Spain which showed that the level of bad debt in the country’s banks had risen to a record 10.7 percent of their loan total in September.

The bank said the amount totaled €182 billion, up from €179 billion in August — the 15th monthly increase in a row.

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Wave of Evictions Leads to Homeless Crisis in Spain [NewYorkTimes]

SEVILLE, Spain — The first night after Francisco Rodríguez Flores, 71, and his wife, Ana López Corral, 67, were evicted from their small apartment here after falling behind on their mortgage, they slept in the entrance hall of their building. Their daughters, both unemployed and living with them, slept in a neighbor’s van.

“It was the worst thing ever,” Mrs. López said recently, studying her hands. “You can’t image what it felt like to be there in that hall. It’s a story you can’t really tell because it is not the same as living it.”

Things are somewhat better now. The Rodríguezes are among the 36 families who have taken over a luxury apartment block here that had been vacant for three years. There is no electricity. The water was recently cut off, and there is the fear that the authorities will evict them once again. But, Mrs. López says, they are not living on the street — at least not yet.

The number of Spanish families facing eviction continues to mount at a dizzying pace — hundreds a day, housing advocates say. The problem has become so acute that Prime Minister Mariano Rajoy has promised to announce emergency measures on Monday, though what they may be remains unclear.

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Is A 15%-Plus Devaluation Coming For Spain And Greece? [Zerohedge]

Countries that have the luxury of their own exchange rate are able to eliminate any loss in competitiveness through an exchange rate depreciation, but (as is broadly recognized by now) UBS reminds that in a single currency area the only route available is an adjustment in relative wages.

In order to restore competitiveness, the periphery will have to endure a period of below-average inflation equal to the disequilibrium that an exchange rate adjustment would have delivered. While the fantasy of an orderly Greek exit is gradually being dispelled – as the market recognizes the almost instantaneous bank runs that would be exaggerated from current deposit withdrawals in Spain, Portugal, and Ireland – the euro’s survival with any status quo is simply impossible – begging the question of ‘so how do they get to the other side?’

The answer, instead of instantaneous devaluation (exit) - akin to tearing the (admittedly big) band-aid off, the devaluation will be undertaken over time to restore competitiveness, the periphery will have to endure a period of below-average inflation equal to the disequilibrium that an exchange rate adjustment would have delivered. This equilibrium ‘devaluation’ is impossible to know with certainty, but UBS estimates it is over 20% for Greece and 15% for Spain.


Via UBS:

Competitiveness pressures and inflation convergence

Long-run inflation trends in the eurozone will be driven by competitive pressures. Countries that have the luxury of their own exchange rate are able to eliminate any loss in competitiveness through an exchange rate depreciation, but in a single currency area the only route available is an adjustment in relative wages.

In order to restore competitiveness, the periphery will have to endure a period of below-average inflation equal to the disequilibrium that an exchange rate adjustment would have delivered.

Indeed, this is exactly the approach we adopt to estimate the long-run inflation prospects in a single currency zone – we quantify the size of the exchange rate disequilibrium and assume that the disequilibrium is eliminated gradually over a period of time.

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Spain’s exposure to the rating agencies [SoberLook]

The recent downgrade of Spanish debt by the S&P is not going to have a significant effect on the bonds’ eligibility as collateral at the ECB. The ECB takes the best of the four ratings of Moody’s, S&P, Fitch, and DBRS to determine the eligibility for repo collateral. DBRS currently has Spain as A−, making downgrades by other rating agencies irrelevant – for now. Private sector collateral requirements are based on different criteria (h/t Kostas Kalevras), but the impact of the private sector changing collateral requirements will be minimal. That’s because Span’s banking system is entirely dependent on the ECB for funding (€378 bn borrowed) – and the ECB criteria is what ultimately matters. Even if all the rating agencies (including DBRS) assign junk ratings to Spanish bonds, the ECB would make them eligible automatically as soon as Spain officially requests the bailout – which should be coming soon.

A DBRS downgrade, even by one notch, would however have an impact on haircuts. In the AAA to A- range the haircut is 1.5% for the shorter maturity bonds and 4% for the longer ones. In the BBB+ to BBB- range (DBRS is one notch above that, while the other rating agencies are already there), the equivalent haircuts go up to 6.5% and 9%. It’s quite amazing how one relatively small rating agency in Canada has the power to increase the ECB repo haircut requirements by 5% for the whole Spanish banking system.

These relatively loose inclusion criteria by the ECB are only available for central government bonds. Local and regional bonds (the equivalent to municipal bonds in the US) do not qualify for such eligibility framework. The ECB will simply not accept junk-rated regional bonds. Moreover DBRS does not rate many regional bonds in Europe, leaving them exposed to the big three rating agencies.


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‘S&P downgrade may push Spain to seek further bailouts’ [RT]

The Standard and Poor’s downgrade may push Spain to ask another EU bailout, but further cash injections will not cure its economic woes, journalist Miguel-Anxo Murado told RT. Whether Spain reduces its deficit or not, its credit rating will suffer.

RT: Spain has reacted to the downgrade saying it was unexpected. But was it actually unexpected given all the negative data that’s been coming from the country recently?

Miguel-Anxo Murado: No of course it wasn’t unexpected but of course it was quite ironic in a way, because if you come to think of it Standard and Poor’s downgraded Spanish sovereign debt last year because our deficit was too high, now its downgraded it because we are reducing our deficit too quickly and this is of course causing more recession, which is something we have been saying all along.But you can see here the inconsistency of how the markets, and I understand Standard and Poor’s in this case is a spokesperson for the markets, how the markets understand the economy.

RT: It looks like the Spanish government has been boxed into a corner by this downgrade and also the pressure coming from the European Union to accept the bailout package? How independent is Standard and Poor’s in its decisions?


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Guest Post: Why Spain Is A Riot [Zerohedge]

Why Spain is a riot

The reason why Spain is a riot both financially and socially goes beyond matters of economic policy. Spain faces a graver problem, its political institutions.

Over the past few weeks, Spain has received worldwide attention due to its deteriorating economy and growing outbursts of massive social protests. Most notably, US presidential candidate Mitt Romney said in his debate with President Barack Obama last week that he did not want his country to “go down the path to Spain.”

As the world fixes its eyes on the eurozone’s fourth largest economy, analysts continue to offer suggestions as to how to best tackle the Iberian country’s economic woes. However, the reason why Spain is a riot both financially and socially goes beyond matters of economic policy. Spain faces a graver problem, its political institutions.

Spain’s political establishment: stale and clientelistic

Perhaps the most lamentable element in Spain’s political class is that it is hard, almost anecdotal, to find elected officials with a track record outside the public sector. For too many years, the country has been governed by bureaucrats who have no experience whatsoever in the real world of business. The majority of Spain’s politicians do not know what it is to conceive an idea, to risk one’s own wealth, to deal with banks, workers and suppliers, and, ultimately, to experience failure and success. Sadly, the Spanish taxpayer-financed political establishment understands failure and success only in terms of which side of the aisle their members are seated in parliament.

Furthermore, Spain’s political system is extremely sectarian and clientelistic. The concept of merit among the political class has been perverted into allegiance to the apparatus – and to the right leader within. Future political promises are embraced by parties when they are young and, years later, the chosen ones find themselves making decisions on public policy without ever setting foot in the real world: a group of individuals whose only interest is that of the party which keeps them fed and spoiled. Unfortunately, and to use Daron Acemoglu’s term, this type of “extractive” political institutions have contaminated other areas of civil society as well and have distorted a free society’s vital values of meritocracy and personal accountability from the educational system all the way to the business fabric.


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‘Democracy kidnapped!’ Madrid police fire rubber bullets as thousands surround Spanish Congress (VIDEO, PHOTOS) [RT]

Madrid riot police have cleared Plaza de Neptune of protesters, with about 200 officers securing the surrounding blocks. At least 60 people have been injured and 26 arrested as police used batons and rubber bullets to disperse the crowd.

Local emergency services have confirmed that at least 60 people, including eight policemen, were injured in clashes between police and protesters, El Pais reports. One of the wounded is believed to be in critical condition, while one of the injured policemen suffered a severe concussion.

Riot police dispersed the protesters, dragging some who had tried to get through police lines by their arms and legs. An uneasy order was restored and reinforcements were brought in to try and disperse the crowd.

Thirteen of those arrested have been detained after a group of protesters tried to break through the police barrier for the first time. Further arrests were carried out during the following clashes, bringing the total number of arrests to some 60, El Pais reported.

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Spain risks break-up as Mariano Rajoy stirs Catalan fury [Telegraph]

It is the latest move in a fast-escalating clash between Catalan nationalists and Spanish nationalists, the latter backed by King Juan Carlos and the Spanish military.

Jose-Manuel Garcia-Margallo, the foreign minister, threw down the gauntlet, calling Catalan secession “illegal and lethal”. He warned that Spain would use its veto to stop the region of Catalonia becoming an EU member “indefinitely”.

The constitutional crisis has eclipsed the parallel drama of a Spanish bail-out request from the European Stability Mechanism. It is no longer clear whether premier Mariano Rajoy can deliver on any austerity deal with Brussels.

Catalan leader Artur Mas held high-stakes talks with Mr Rajoy in Madrid on Thursday, armed with a mandate from the Catalan parliament and with charged emotions left from an unprecedented protest by 1.5m people in Barcelona 10 days ago.

He demanded an independent treasury for the rich Catalan region, with control over its own tax base akin to the model already enjoyed by Basques. The 9m Catalans have an economy the size of Austria’s.

Catalonian independence graffiti


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Spanish Treasury placed 6,000 million in letters and obligations to increase capital FROB

Specifically, the Treasury has posted letters to six months, expiring on March 15, 2013, and a new tranche of bonds, with a coupon of 4.30% and mature on October 31, 2019, with a coupon of 4.85 % and mature on October 31, 2020.

This issue occurs after the FROB Governing Committee on Monday agreed to proceed immediately to a capital injection in the BFA-Bankia group amounting to 4,500 million euros.


The authorization for the operation, which has opted for simple sales formula, has been published today in the Official State Gazette (BOE), which tomorrow will know the details of the sale, and has subsequently been proceeded to placement.


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“Spain Requests Bailout On September 14″ – Goldman’s Definitive Post-Mortem On Europe’s Third Bond Buying Attempt [Zerohedge]

Yesterday, when Bloomberg leaked every single detail of today’s ECB announcement, which thus means today’s conference was not a surprise at all, yet the market sure would like to make itself believe it was, we noted that everything that was leaked, and today confirmed, came from a Goldman memorandum issued hours before. Simply said everything that happens at the ECB gets its marching orders somewhere within the tentacular empire headquartered at 200 West. Which is why when it comes to the definitive summary of what “happened” today, we go to the firm that pre-ordained today’s events weeks ago. Goldman Sachs.Perhaps the most important part is this: “September 13-14: Spain to make formal request for EFSF support at the Eurogroup meeting. With a large (and uncovered) redemption looming at the end of October (and under pressure from other Euro area governments), we expect Spain to move towards seeking support.” In other words, Rajoy has one more week before he is sacked and the Spanish festivities begin.

From Goldman’s Dirk Schumacher

ECB meeting: Introducing the OMT

The announcements made at today’s ECB press conference were broadly in line with our expectations. An overwhelming majority of the Governing Council agreed to “address severe distortions in government bond markets, which originate from, in particular, unfounded fears on the part of investors of the reversibility of the Euro”. We view the ECB’s determination to provide a “fully effective backstop” as credible and, while we will only learn over time the practicalities of implementation (such as the range of yields the ECB deems consistent with an ‘irreversible Euro’ and thus will tolerate), today’s decision has nonetheless reduced tail risks in peripheral countries, at least in the shorter term. This should buy peripheral economies time to implement the consolidation and reforms needed to provide fundamentals consistent with continued Euro participation.

Details of the OMT

In order to qualify for the new Outright Monetary Transactions (OMT) program, countries will need to be participating in either a full or precautionary EFSF/ESM programme and accept the implied conditionality. IMF involvement will be sought in this context and the IMF has meanwhile released a press statement “strongly welcoming” the ECB’s decision, saying that it would cooperate with the ECB “within our framework”. Failure to fulfil the conditions established in the programme would lead the ECB to cease purchases. Existing programme countries can also qualify for the OMT “if they have regained bond market access”. What this means in practice (i.e., will it be necessary to issue a certain volume in order to prove that there is market access?) remains to be seen.

Purchases will concentrate on bonds with a maturity from one to three years, and will be fully sterilised. The ECB is already sterilising the purchases made under the SMP through weekly reverse tenders. These tenders drain the amount of money from the banking system that the ECB spent on buying peripheral bonds. The specifics of how OMT purchases will be sterilised have not been announced, but our base case is that they would take place in the same manner. The ECB will demonstrate greater transparency in publishing the magnitude, duration and country composition of the debt holdings accumulated under the OMT.


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Spain’s BALLS. Part Three. A right load of [GolemXIV]

Part one was the Bad Bank. Part two was, what might be in the BB courtesy of Bankia and the other Caja. Part three…

Part two of this series ended talking about Recourse and Non-recourse loans. Noting that Spanish mortgages are recourse. Meaning that if  the borrower defaults the lender/bank has recourse to not only the collateral on the loan, i.e. the house, but also all the borrower’s other assets as well. From this one fact I think we can glean a little clarity.

Unlike the situation in America, for example, you cannot walk away form a mortgage in Spain. Thus people haven’t. The Spanish will do almost anything to not default on their mortgage because they fear losing all their assets not just their house.

But at the same time Spain has and has had HUGE unemployment. At present the unemployment rate is a socially destructive 25%. That is 4,630,000 people not earning any money, not paying any taxes. It has been over 20% for a couple of years now. Youth unemployment is over 50%!

How are those 4.63 million Spanish people paying their debts? If many of them have a mortgage, how have they been paying it?

Well we might note that capital has been leaving the Spanish bank at an alarming and accelerating rate.

An article at Zerohedge notes,

Spanish financial institutions suffered the largest deposit outflow on record in the month of July when a whopping EUR74 billion, or 5% of the country’s entire asset base, picked up and left

This is a huge acceleration. In the first three months of the year the outflow was already alarming but was ‘only’ €97 billion or 10% of the nations GDP.  Predictably, it gets worse. CNBC today reports,

On a three-month rolling basis, portfolio and investment outflows from Spain totaled 52.3 percent of the country’s gross domestic product (GDP)


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Spain’s Social Security Fund Runs Out of Money; Full Sovereign Bailout Hits €300 Billion; Breathtaking Implosion in Every Way; Five Things Spain Needs to Do [Mish]

The Spanish implosion in breathtaking in every way: Human Flight, Capital Flight, Real Estate, Employment, and Taxes. The cost of a full bailout is now €300 billion, up from a preposterously low €30 billion projection in June.

€300 billion should not be shocking given my statements on June 9th in Bailout Lite? There’s Really No Such Thing; €30 Billion Needed? It’s Now €100 Billion; Contagion of Economic Idiocy.

A few days ago Spain was purportedly going to need another €30 billion to €70 billion to recapitalize Spanish banks. I suggested the amount would be at least triple that…triple the upper end of the reported amount. Bear in mind I am just guessing. However, history shows that I am more likely to be on the low end than the high end.

As with Greece, every economic number from Spain is revised to the downside, month in and month out. For now, the EU economic wizards will likely concoct a number just under that alleged “upper limit”. My best guess is €90 billion. Then within six months, possibly as soon as the money is handed over, more problems will surface, more meetings will take place, and still more money will be stolen from Spanish taxpayers and handed over to the banks and bondholders.




Bank of Spain providing emergency loans to Spanish banks; pressure mounts on the ECB [SoberLook]

Despite the ECB’s rhetoric on defending the euro that pushed up global risk asset valuations, the underlying issues of the Eurozone have not been resolved. Signs of the run on Spain’s banks are once again in the press. Previously we had Der Spiegel describe the enormous euro deposit outflows from the Spanish banking system (see post). The problem has not gone away and here is an update with some explanations (in italic).

WSJ: – The latest trouble is the inability of Spanish banks to finance themselves through usual means. Capital markets remain largely shut because investors refuse to buy bank bonds at affordable prices. And customers, nervous about the banks’ health, are increasingly yanking their deposits.

The banks appear to be exhausting their capacities to wring cash out of the European Central Bank, the lender of last resort for much of Southern Europe’s battered financial system [see this discussion on how the National Central Banks fund this lending].

The problems have been building since last fall. But the recent intensification has sent Spanish officials scrambling to prevent their banking system’s liquidity problems from escalating into an acute financial crisis. Many experts expect the ECB to ride to the rescue on Thursday by making it easier for euro-zone banks to borrow money from it. [the only way it can make it easier is by loosening the collateral requirements]

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Spain VAT Hike Largest In History; Stunning Ineptitude Will Make History Books [Mish]

Fiscal deficits continue to mount in Spain in spite of austerity measures and tax hikes. Spain desperately needs work reforms, but on that score there has been little progress.

Instead, the government keeps hiking taxes to combat ballooning deficits, only to see further declining revenues in which the government hikes taxes again and again in an absurd attempt to make up for those shortfalls.

Via Google translate from Libre Mercardo please consider The VAT increase is the largest tax increase democracy.

 Each Spanish pay an average of 20.8% VAT, 369 per year, six days of extra work to comply with the Treasury.

The VAT increase, which took effect on Saturday, raising the general rate of 18% to 21%, reduced from 8% to 10%, while the super-reduced-duty on-staples remains 4%. In addition, hundreds of products previously taxed at 4%, as school supplies, and 8%, such as film and hairdressers, pass it to 21%, nearly three multiplying its previous taxation.

But beyond these percentage increases, the increase in VAT means that a worker will pay on average 369 euros per year ditional this concept, a 20.79%, according to a study by the think tank Civics. Thus, the taxpayer will have to work six days a year just to meet its commitments to the Treasury.

In retrospect, it is “the largest tax increase in democracy”, as it will reduce the disposable income of citizens even more than the increase of VAT by the previous government of Rodriguez Zapatero (192 per year) and the recent income tax hike approved last December Mariano Rajoy (137 euros) “together”, the report warns. Successive increases applied to income tax and VAT since 2010 have undermined the middle class almost 700 euros per year.

Furthermore, according to the head of Research Civics, Cristina Berechet, this higher tax will not serve to raise more, and will restrict consumption and probably increase fraud. “The VAT rise is incompatible with some as high taxes to work, “he says.


Poor People in Robin Hood style Supermarket Raids

It seems the austerity measures in Spain are forcing people to act in ever more desperate ways, as a supermarket has been looted by labour union members, in a series  of Robin –Hood style attacks. Three people were slightly injured as the looting went on. It is believed the basic goods, worth 1,000 Euros were then handed out to local people.
This lady shows the goods she received.
She then went on to say she didn’t think there was anything wrong and that people had to eat.
“I don’t think they are wrong. We have to eat even though the government cannot give jobs to the poor. You can see now even the dogs on the street are living well, but we the grassroots Spanish people have to struggle to live on.”
Sanchez Gordillo who led the daring raids, is the leader of Andalusia region’s labour union; also the mayor of the city of Marinaleda. Seen here, speaking in a public square he has widespread support within the local community. Here he explains his actions and motivation.
“The German banks, Spanish government and the Prime Minister (Mariano) Rajoy are the real robbers. They robbed the money of the poor to support the rich and help the banks. I just want to oppose them by my behaviour.”
There have been two lootings carried out by respected labour leaders in the past few days. They feel the Spanish government aren’t helping the grass level population. And that this Robin- Hood style looting, from the rich to give to the poor is justified.



Spain creates bad bank, injects funds in Bankia [Reuters]

Spain overhauled its banks for the fifth time in three years on Friday in order to secure up to 100 billion euros ($125 billion) in European aid, and injected emergency funds into its biggest problem bank, Bankia.

Spain’s banks are saddled with 184 billion euros in bad loans and repossessed buildings four years into a property market crash and are in urgent need of rescue because most are cut off from funding other than from the European Central Bank.

The government created a so-called bad bank to take over tens of billions of euros in defaulted loans and unsaleable property to meet the conditions of the European rescue of the financial sector, Economy Minister Luis de Guindos said.

Spanish banks’ difficulties are at the heart of the euro zone debt crisis, but the rescue has not cleared up doubts about the sector and Spain is under pressure to ask for a full sovereign bailout like Greece or Portugal.

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Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain [NYT]

After working six years as a senior executive for a multinational payroll-processing company in Barcelona, Spain, Mr. Vildosola is cutting his professional and financial ties with his troubled homeland. He has moved his family to a village near Cambridge, England, where he will take the reins at a small software company, and he has transferred his savings from Spanish banks to British banks.

“The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week just hours before boarding a plane to London with his wife and two small children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.”

Mr. Vildosola is among many who worry that Spain’s economic tailspin could eventually force the country’s withdrawal from the euro and a return to its former currency, the peseta. That dire outcome is still considered a long shot, even if Spain might eventually require a Greek-style bailout. But there is no doubt that many of those in a position to do so are taking their money — and in some cases themselves — out of Spain.

In July, Spaniards withdrew a record 75 billion euros, or $94 billion, from their banks — an amount equal to 7 percent of the country’s overall economic output — as doubts grew about the durability of Spain’s financial system.

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Bankia – the fraud and waste continues [Martin Cole]

This from here yesterday -

Bankia, nationalised by the Spanish government in May, lost 4.448 billion euros in the six months to end-June after provisioning 2.7 billion euros in the second quarter against bad debt and assets. Spain’s Fund for Orderly Bank Restructuring (FROB) said it would inject capital into Bankia immediately

This blog has been following the lies and deceit over Bankia for well over a year, some of what we posted is here, (bearing in mind as always nowadays, that this blogger has evidence that some of the past postings have been altered and tampered with by unknown third parties).

I would particularly like to repeat this warning from this July, as follows:

Given that foul, dirty and despicably fraudulent tactics were used to disguise losses within the Spanish banking sector and pass off some of the already known losses to depositers AND that this happened in one part of the EU where all that is awful, rapidly spreads throughout the other twenty-six member states while all that is worthwhile is ruthlessly turned against and eradicated, it would be worthwhile if Britain’s bank account holders read of some of the tricks used, so as  to avoid being duped in the same manner and reduce similar potential losses in Britain.

This is probably particularly true regarding RBS, whose head has warned of huge coming financial penalties in respect of that bank’s failings over LIBOR, events that took place before the taxpayer became obligated for its past sins, read here.

Spain’s Budget Deficit Already Exceeds Maximum for Entire Year; Path of Convergence [MISH]

Spanish unemployment rate is 25% and rising. Youth unemployment is 52.9% and rising. Meanwhile Spanish budget deficits are such that Spain will need more austerity. I keep wondering what it will take for this setup to blow sky high in riots.

Via Google Translate from Libre Mercado central government deficit already exceeds the maximum provided for the year

 The central government posted a deficit of EUR 48,517,000 through July in terms of national accounts, the 4.62% of GDP, representing an increase of 25.8% compared to last year, according to data provided by the Secretary of State Budgets, Marta Fernandez Currás. The deficit figure exceeds the new limit has assumed the state, which has risen to a point, to 4.5%, for the extra year he gave Brussels to Spain to reduce the deficit to 3%.


Spain’s bailed-out Bankia ‘loses €4.3bn in six months’ [Telegraph]

Bankia, Spain’s fourth largest bank by assets, recorded a net loss of €4.3bn in the first half of the year, topping the loss it suffered in all of 2011, according to reports.

The Bankia headquarters building is seen in Madrid

Bankia’s request in May for a historic bailout of €23.5bn (£18.6bn) prompted the eurozone to prepare a loan of up to €100bn for all Spanish banks.

Spain itself might nontheless have to seek a state bailout in the coming weeks.

The bank, which was nationalised as it received the aid, had announced a net loss of €2.979bn in 2011.

The loss for the first half of 2012 is much higher at around €4.3bn euros, according to economic daily Expansion, which added that Bankia’s accounts were due to be approved by the board of directors on Friday.

Bankia is required to publish its half-yearly accounts before September 1, AFP reported


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