Spanish and Italian 10-year bond yields have been rising ahead of a summit of eurozone finance ministers on Monday. The yield on Spanish 10-year bonds, which are taken as a strong indicator of the interest rate the government would have to pay to borrow money, rose above 7%, while Italian bond yields rose to 6.1%. Yields above 7% are considered to be unsustainable in the long term.NO SURPRISE TO REALISTIC FOLKS WHO HAVE BEEN PAYING ATTENTION:
IOW: Farage was right again!
WHAT WILL SPAIN DO:CUT SPENDING AND PROBABLY DEFAULT:
In headier times, Ciudad de la Luz was envisioned as a mega-movie studio “where fairy tales are made real.” Its state-of-the-art wave-making machines could whip up a tsunami-style disaster in an enormous water tank facing the Mediterranean Sea, like a Hollywood on the Spanish Riviera.
But today the water cannons at Ciudad de la Luz, which means City of Light, are dry, and the studio’s 54 acres of back lots are nearly deserted. The publicly financed compound is up for sale, and struggling to attract film production companies. European Union authorities have issued an ultimatum to the regional government of Valencia to explain by this week how it intends to recover $325 million in taxpayers’ money improperly spent on movie mogul ambitions.
The answer could be brief. “Effectively, there is no money to give back,” said José Ciscar Bolufer, the vice president of Valencia’s current regional government.
The studio’s creation, in 2005, was part of a building binge repeated throughout Spain’s 17 autonomous regions. As the nation’s crisis now deepens, the combination of interests — bankers, construction magnates and regional government officials — responsible for excesses like Ciudad de la Luz has come under new scrutiny here and elsewhere.
In the aftermath of Spain’s banking bailout in June, the central government in Madrid is facing intensifying pressure from investors to balance the country’s books by curbing the regions’ powers over spending, particularly on health and education. The conservative government of Prime Minister Mariano Rajoy has also blamed the regions for much of Spain’s recent fiscal problems and, as a result, set strict 2012 budget targets and passed legislation levying fines on regions that fail to meet the goals.A DEFAULT WILL BE A GOOD THING FOR SPAIN - AND IF IT BRINGS THE EURO DOWN, THEN IT WILL EVENTUALLY BE A GREAT THING FOR EUROPE.
NOTE: IT'S PUBIC SPENDING THAT IS DESTROYING EUROPE'S CURRENCY AND SOVIET-STYLE GOVERNMENT.
IOW: SOCIALISM STRIKES AGAIN!