Sunday, February 14, 2010

Spain...Spain...more Pain to come?

I read today in The New York Times that Goldman Sachs helped Greece to borrow billions quietly in a deal "...hidden from plubic view because it was treated as a currency trade rather than a loan..."; and it goes saying "...that deal...helped Athens to meet Europe´s deficit rules while continuing to spend beyond its means".

For quite some time now, many independent observers around the world have entertained doubts about the accuracy of the economic statistical data that have been provided by the government of Spain; many analysts have rightly pointed out that the recent fall in Spain´s GDP (-3.8%)during this Great Depression in this country, at least as seen from the horrific unemployment figures, does not quite correspond to the plunge that one might had expected. In simpler words, given the existing high Unemployment rates, the huge fall in both Productive Investment and Consumption and the significant plunge in its Construction and Tourism sectors, the Spanish economy could have been expected to fall even more than, for instance, the usually strong German Economy whose GDP actually fell (-6%) throughout the same period.

Based on the recent information published about Goldman Sachs as mentioned above (see The New York Times "Wall St. Helped Greece to Mask Debt Fueling Europe´s Crisis", February 14, 2010), we can now rest assure that it is just a matter of time for all of us to be able to fully understand why is it that many were not able to quite get why the Spanish Economic Data did not quite appear to fit any model.

Indeed, it is going to be even more painful for Spaniards -in permanent state of denial- to find out that their country, and not just Greece, also made itself readily available to make use of Goldman Sachs´ or someone else´s derivatives to mask their own real debt levels and, of course, the very weak condition of the health of their seriously ill economy.

There is certainly more Pain to come to Spain. And someone is going to have to pay the Political price for such a misguided behaviour. Perhaps we are witnessing the last days of the Zapatero Government and those of the misplaced Spanish Economic Model that only brought fortunes to quite a lot of polititians and fewer bankers and builders.