Spain Cannot Pay €26 Billion Defense Budget, Effectively Issues IOUs to Keep Within Stated Austerity Measures

If you need proof that Spain cannot possibly stay within austerity limits mandated by the ECB, please consider the following Google Translation (modified by me for readability) of an article on El Pais: Defense Department Renegotiating a 26 Billion Debt it Cannot Afford to Pay

If the homeowner stops paying the mortgage, the bank will not hesitate in foreclosure. But if the Ministry of Defence does not pay the installments of a battleship, a tank or a fighter, who will dare to seize?

The situation may seem surreal, but it is real.

Principle Programs



The overall bill called special programs of weapons - 19 weapons systems that mostly incorporate new technologies - totals 30 billion, around 3% of Spanish GDP, of which Defence has so far paid just under 5 billion.

Companies should be paid the remaining 26 billion in installments through 2025, but defense officials themselves acknowledge that this is impossible without a drastic increase in the budget, which is unthinkable that Spain has set a priority to reduce the deficit 6% at the end of this year and 3% in 2013 (with 2010 data, the deficit of all government is 9.2% of GDP).

Already in 2011 the Ministry of Defence has been in serious trouble to meet their obligations.

It's a cyclical problem but the situation is worse in the future. Defence sources said they would not have enough money even if there were no additional expenditures through 2025.

In his appearance before Congress last October to present the budget this year, Secretary of State for Defence, Constantino Mendez , already referred to in the starkest terms the policy has led to this situation. "We should not have purchased weapons we are not going to use for scenarios of confrontation that do not exist and, more seriously, with money that we did have then and do not have now."

Is US Really Any Different?

Look at those Spanish tanks, ships, planes, and submarines. Is Spain preparing for an invasion from France? Portugal? Italy via the Mediterranean Sea?

The US military budget situation is similar but the amounts are orders of magnitude greater.

Is the US threatened by Canada or Mexico? Cuba via the Gulf of Mexico?

If not, "We should not have purchased weapons we are not going to use for scenarios of confrontation that do not exist and, more seriously, with money that we did have then and do not have now."

Stupid Wars and US Sponsored Torture

In a stupid war that should never have been fought, US citizens were tortured in Iraq with tactics approved by Donald Rumsfeld.

For an explanation as to how that happened please consider U.S. Circuit Judge Upholds Right of Two US Citizens, Tortured in Iraq, to Sue Former Defense Secretary Rumsfeld for Torture.

Is WWII Coming Again?

What pray tell are countries doing with all these needless weapons? Preparing for another WWII?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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