With Greece off the menu, all eyes in Europe are turning towards Spain as a source of immediate debt concern. And, according to Spanish economist Luis Riestra Delgado, “no one can help us.”
Spain, with a deficit 11% of GDP, is susceptible to a ‘debt jam’ not just because of the size of its problem, but the time in which it has to rollover 66 billion euros ($89 billion) of old debt and add 110 billion euros ($149 billion) of new debt. According to Delgado, the average maturity of Spanish debt at 6.7 years is at the heart of the crisis, as the country has to be constantly tapping debt markets.
The Spanish economy got into this mess for several reasons, including bad government stimulus policy like Plan Ẽ, according to Qorreo, and the European Union’s economic policies which put Spain at a competitive disadvantage due to labour issues.
The size of Spain’s debt load puts it outside the bounds of a European backstop, like the IMF-EU deal set up in response to the Greek crisis. Greece’s bailout required 20-30 billion euros in aid ($26.7 to $40 billion). According to Delgado, Spain needs to tap debt markets monthly for 15 billion euros ($20 billion).
Involvement in European state debt crises has been aggressively opposed by German Chancellor and de facto E.U. strong arm Angela Merkel.
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