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The rescue of Spain's banks will cause the country's budget deficit to hit 7.4% this year, above...

The rescue of Spain's banks will cause the country's budget deficit to hit 7.4% this year, above its 6.3% target, the government said yesterday. Authorities reckon Spain could require €40B of its EU credit line after stress tests showed the sector needs €53.75B. Spain's debt-to-GDP ratio will rise to 85.3% in 2012 - above a previous forecast of 80% - and 90.5% in 2013.
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Comments (9)
  • Brian Bobbitt
    , contributor
    Comments (1905) | Send Message
     
    To put this in layman's terms, ( a layman is us poor slobs who fund the nonsense of the banks and our leaders both here and abroad )
    They are still spending more than they take in, and want those on the tax roles to pay for their folly.

     

    All I can do, is hide behind some high paying REITs for the time being, hang there in the hot sector of PM's, and hope for the best.

     

    I see a lot of global problems out there, both economically and politically speaking, so it is time to hunker down. Perhaps wait on the fall vacation, just put a few extra in the pocket, and see where this thing is going. [I am talking about the macro economics that really control our economy]

     

    Perhaps now is a good time to get in cash, take profits, miss a few dividends and research your soul and buying habits both at the store, and at the "stock market".

     

    I can't tell if shorts are going to be in order yet, but I am wary beyond any wariness I have experienced in the last 15 years or so since these 'recessions' are able to take away a lot of equity, very fast, then climb again, the greased pole of recovery.

     

    No crystal ball, or time machine we joke of, but there are fluid facts out there that should help a great deal.

     

    I am sitting there, with all trailing stops off, and riding the wave, but there is a shark in the wave, and I think it is time to look very seriously at defensive moves for a bit.

     

    Capt. Brian
    The Lost navigator

     

    If you MUST buy something in here, buy SLV and SIVR, and some silver eagles for your pocket.
    30 Sep 2012, 08:46 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    Well said.
    30 Sep 2012, 09:18 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2055) | Send Message
     
    Scary; I guess the herbal Valerian was named after the Roman Emperor Valerian, those were the days. LOL!
    30 Sep 2012, 09:25 AM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Precious metals are deeply correlated to equities....so if I'm going to sell equities and shut in a cave like a well right wing lunatic, buying silver has to be the most inane thing to do....
    30 Sep 2012, 09:43 AM Reply Like
  • Daveintosa
    , contributor
    Comments (142) | Send Message
     
    Economist POP will work long term! GO BREWERS!!!!
    30 Sep 2012, 09:25 AM Reply Like
  • Abraxas
    , contributor
    Comments (300) | Send Message
     
    "They are still spending more than they take in, and want those on the tax roles to pay for their folly."

     

    That is absolutely incorrect. The deficit move has nothing to do with spending. It has to do with the fact that the money needed for the banks, even if it comes from the ECB, counts against the Spanish government deficit because it goes through the system.

     

    That is why there is work being done so that the ECB can, in future, give the banks the money they may need directly, without to have it go though the various countries.

     

    That is one of the obvious disadvantages of the way the EU is structured today, compared to a fully sovereign country like the US that can flush the banking system or the housing market with liquidity directly without increasing the US deficit.
    30 Sep 2012, 01:02 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9953) | Send Message
     
    And what is the ECB, EFSF, or Spanish government getting in return for the 50+ billion bailout of the Spanish banks?
    30 Sep 2012, 05:42 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    What a disaster. The great things is that Spain's budget deficit as a % of GDP is still lower than the US deficit! Isn't that amazing.
    30 Sep 2012, 05:51 PM Reply Like
  • Abraxas
    , contributor
    Comments (300) | Send Message
     
    At around 40% of GDP, before the current crisis hit GDP and the government revenue stream so hard, the Spanish deficit was lower that most other European nations. Like Greece's deficit, it has gone up substantially due to the recession bringing GDP contraction and diminished tax revenue and not, as some think, due to more spending.

     

    Greece has cut its spending massively, and yet, five consecutive years of negative GDP growth have made its economy smaller. Thus, the deficit being measured as a percentage of GDP has ballooned. That is why is can be so harmful to only look at it from a percentage basis and impose draconian austerity measures, as the Germans so insisted, which harm the economy and make matters worse.

     

    Beyond reasonable and serious austerity measures, what these countries need is real growth. Once they achieve it, the deficits will come back down again.
    1 Oct 2012, 06:06 AM Reply Like
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