Sunday, 15 July 2012


is now leaving Spain at a rate of ~50% of GDP, annualized, according to CreditSuisse. The details are over at

Last week also brought a massive new austerity program from the Spanish government, worth ~65 bn €, or 6.5% of Spanish GDP. Up goes VAT, down the pay for civil servants, etc. While retail sales are falling at 10% p.a., that is a really smart move. As I predicted in January, after the last austerity program, growth will slump, fiscal revenue will dry up, and nothing gets better. That turned out to be exactly right, and this new program will make matters worse. Of course, if you have to make a mistake, make it at least twice... in six months. The bond market is not impressed - it worries more about growth than about the deficit.

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