“Spain is officially insolvent. Just look at the International Monetary Fund (IMF)’s latest Fiscal Monitor, says U.K. Daily Telegraph columnist Jeremy Warner.
His advice: Get your money out now.
“I don’t advise getting your money out lightly. Indeed, such advice is generally thought grossly irresponsible, for it risks inducing a self-reinforcing panic. Yet looking at the IMF projections, it’s the only rational thing to do.”
The IMF’s report, he says, comes as close to declaring Spain as being insolvent as you’ll ever see in an official analysis.
“The IMF is far too diplomatic for such language. But that’s the plain meaning of its latest forecasts, which at last have an air of realism about them, rather than being the usual dose of wishful thinking,” Warner writes.
Spain’s budget deficit is projected to decline this year to 6.6 percent of gross domestic product (GDP), Warner notes. That steep drop is mostly due to the cost of bailing out the banking sector from last year. Other than that, the deficit didn’t really fall much. And the IMF doesn’t predict it to fall any time soon.
The structural deficit, or permanent debt remaining even after economic growth returns, is even worse.
“By 2018, Spain has far and away the worst structural deficit of any advanced economy, including other such well known fiscal basket cases as the U.K. and the U.S.,” Warner explains…..”
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