Thursday, June 28, 2012

Spanish toxic "rescue" makes private loses into public debt

That's what Joseba Garmendia, economist from the University of the Basque Country: the private loses of the rescued banks now become by the magic of political babble into the public debt of you and me, who were not involved in the matter at all originally.

In the next three years the financing demand will be brutal and if the current interest rate of 6-7% remains it will become a snowball of unpredictable consequences

Greece, Ireland and Portugal have been intervened for more than two years and, in spite of all the cuts, they have not been able to reduce public debt, but rather to increase it. Anyhow, emphasizes the economist, it is not any novel medicine: the IMF has been applying it for some 30 years with awful results.

He says that the Spanish government does not only cause distrust inside but also outside. The reforms they have applied are barbarities and, if they follow that way, they can only continue with the orthodoxy of economic austerity and keep cutting what will depress even more the economy.

He instead recommends to spend more, not necessarily by increasing the deficit (although if need be...) but by raising the taxes for the rich and to corporations.

Source: NAIZ[es].

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