Shock News!!!! Spain, Portugal, And France To Miss Debt Goals

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Well, I called this from the start.  Laffer’s curve is still laughing at these pinheads. 

Spain, France to miss debt goals as euro zone stays in recession

BRUSSELS (Reuters) – The euro zone will not return to growth until 2014 and struggling Spain and France will be among those who miss debt-cutting targets as a result, the European Commission said on Friday.

Paris and Lisbon said they would seek more time from Brussels to reach their deficit goals. Madrid has already indicated the same.

The EU’s executive said the euro zone economy, which generates nearly a fifth of global output, would shrink 0.3 percent in 2013 after a 0.6 percent fall last year, blaming a lack of bank lending and record joblessness for delaying the recovery.

That represented a marked downgrade of the Commission’s prediction from November that the euro zone would grow this year. The euro slipped on the back of the forecasts. …

The main laggard was Spain, which badly missed the 6.3 percent of GDP target for 2012 with a result of 10.2 percent. While that included 3.2 percent of GDP cost to recapitalize banks, even at 7.0 percent the deficit was above target.

This year, Madrid will have a deficit of 6.7 percent rather than the 4.5 percent set for it. And unless policies change, Spain will have a gap of 7.2 percent in 2014 against the target of 2.8, the Commission said…..

Commission forecasts showed Portugal’s headline budget deficit rose to 5.0 percent of GDP last year from 4.4 in 2011 and will only ease to 4.9 percent this year, unless policies are altered.

But Portugal’s GDP is now seen shrinking almost twice as much as previously this year — 1.9 percent instead of 1 percent.

France will also miss its nominal deficit targets – this year’s shortfall will be 3.7 percent rather than the 3.0 percent agreed with the EU, because of the weaker than expected growth.

Would love to add commentary but have to run…..

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9 Responses to Shock News!!!! Spain, Portugal, And France To Miss Debt Goals

  1. cdquarles says:

    Lack of bank lending? Really? Who wants to borrow money that will be put at risk in the current economic conditions? Only a fool wants to borrow money at this time. So, who would the banks be lending to? Good projects sponsored by creditworthy entities? Nope, these folks are not looking to borrow money much. Who is left? Shall I say it, insolvent entities, who by definition are entities you don’t want banks lending to. Ok, then, I guess we’ll make the banks lend to governments (insolvent and foolish with arrogance on top). Yeah that’s the ticket … not.

    • DirkH says:

      “Only a fool wants to borrow money at this time. ”

      Not really. You can currently borrow money for a house purchase in Germany for 2.7% ; 50% downpayment. Higher rate if you pay less down. This is real; a guy I know just got such a mortgage.

      As in the US, central bank interest rates cannot go down any further while money will be printed (Draghi’s OMT – buying state debt of PIGS directly if needed, which he WILL have to do in a few months. He announced it; his word gave the markets confidence and made PIGS interest rates drop; now they are on the rise again, he will have to deliver. Hot money will flood the markets. Inflation will go up. The EUR already drops against the USD in anticipation.)

      So if you get this credit now for a long term fixed rate you can pretty much count on future deflation and EUR devaluation to wipe out your debt.

      I’d do it if I weren’t gambling on stocks and Gold (currently Gold; as I expect stocks to have a really bad, not so good day RSN).

      • DirkH says:

        “count on future deflation” – TYPO: inflation, of course.

      • cdquarles says:

        Sounds foolish to me, still. Way too much risk for current returns and when the visible interest rates rise to reflect the IRR rates, what then? Defaults, check. I’d rather hold on to my own money as long as I can to preserve capital and hope to get good hard assets at fire sale prices. Either that, or hope to ride out the hyperinflation and have things I could use in barter. You can get ‘cheap = artificially low rate’ mortgages here in the States, too. If I had it, I’d rather pay cash (bought a fixer-upper a few months ago for a few thousand US and when it is finished, we’ll live in it).

        • DirkH says:

          Currently, the low interest rates of the ECB (0.75 %) are set to accomodate the needs of the weak economies of the PIGS – Germany is close to overheating and would need an interest rate of about 4%.

          As we are tied to the PIGS, this ain’t possible…

          And as I said, the guy got a FIXED interest rate on his mortgage. Not a variable one.

  2. Latitude says:

    The euro zone will not return to growth until 2014 …….

    ROTFL…..they said 2013……………..last year!

  3. DirkH says:

    “France will also miss its nominal deficit targets – this year’s shortfall will be 3.7 percent rather than the 3.0 percent agreed with the EU, because of the weaker than expected growth.”

    Sacre Bleu!
    Slowly even mainstream media in Germany, starting from the right, smell the rotten cheese…
    William Banzai7:
    http://www.flickr.com/photos/expd/6318912248/

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