“Here’s What’s In Citi’s Gloomy New Report On The Crisis In Spain
Earlier we mentioned how Citi top economist Willem Buiter had a big warning about Spain.
We’ve now seen a copy of the report, and get tell you some more details.
Here is our bullet-pointed summary of the report:
- Spain’s public finances are worse than officially stated. Already there have been upward revisions to debt-to-GDP, and the number could rise as high as 90% when all the various categories of debt are added together.
- The fact that GDP assumptions are badly missing estimates makes this all worse.
- Although Spain’s banks get a lot of attention for being ugly, the non-financial sector is doing badly as well. Households are overleveraged.
- The new government delayed reform legislation too long, missing the ‘honeymoon period’.
- Spain’s PM Rajoy is alienating partners in Germany and France by announcing revised deficit targets without consultation.
- The decline in Spanish land prices is not over.
- The spending problems in various autonomous regions are big, and the central government cannot control them.
Buiter’s Conclusion:
Spain is likely, in our view, to be pushed into a troika (EC, ECB, IMF) programme of some kind during 2012……”
