Spain: heading towards a technical default?
A report based on data compiled by Bloomberg analyses the global economic situation and lists the countries most at risk of bankruptcy. Spain is not on the list, but it exhibits some markers of an economy close to collapse, artificially propped up by the ECB bailout.
As with companies, states can declare bankruptcy or default when they are unable to meet their financial obligations due to a lack of liquidity. Runaway public debt, together with high external debt and fiscal deficits, are the main indicators that anticipate a country’s bankruptcy.
The study by Bloomberg Economics warns that a “historic cascade of defaults from emerging markets” is coming. In other words, there is a group of countries that are currently at high risk of default or bankruptcy. In addition, he notes that the number of developing countries that are close to economic collapse has doubled.
El Salvador, Argentina, Ghana, Egypt, Tunisia and Pakistan top the list of 50 countries accumulating a quarter of a trillion dollars of debt that could lead them to the same situation of economic bankruptcy in which Sri Lanka finds itself. The first country to default on its sovereign debt this year.
Spain’s public debt is at an all-time high
Each Spaniard owes more than 31,000 euros. This is the figure that corresponds to each citizen of the 1.45 trillion euros of accumulated public debt. A debt that is growing at a rate of 270 million euros per day, and which from 2020 to 2021 increased the fiscal hole by 200,000 million euros.
An economic situation of extremely high uncertainty, with inflation running rampant and GDP shrinking as all the institutions make downward forecasts every few months, point to the precariousness of the vital constants of a country incapable of meeting its public debt without the help of the ECB. A covert bailout that, as we have seen in other crises, has a cost and threatens our quality of life.
Europe is already calling for a halt to stimulus and a return to “fiscal discipline“, a well-known euphemism that in practice amounts to more cuts and tax burdens for citizens who can barely cope with the magnitude of the current economic tragedy. No wonder that, with a popular revolt looming, they are urging a balance between this “fiscal discipline” and “social peace”.
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Renowned economist Robert Kiyosaki has predicted “a historic crisis“.