Spain Records Largest First Quarter Deficit in History; Tax Revenues Plunge 6.7% Year-Over-Year; Surprising Comments from German Finance Minister Wolfgang Shäuble
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Spain keeps digging a bigger and bigger hole as the latest economic reports show.
- In spite of massive tax hikes, overall revenue is down 5.3% YoY
- Tax collections are down 6.7% YoY
- VAT collection is down 9.9% in spite of a September increase in the VAT rate
- Non-interest expenses are up 1.1% from a year ago
- As compared to the first quarter of 2011, tax revenues have plunged by 58%
- As compared to first quarter of 2011, personal income tax and other direct taxes have fallen almost 35%.
Those numbers are courtesy of Libre Mercado which reports Spanish Government has Largest January to April Deficit in History.
Surprising Comments from German Finance Minister Wolfgang Shäuble
So what does Shäuble have to say about this?
Please consider these Google-translated snips from the Libre Mercado report Wolfgang Schäuble supports Rajoy's policies and Cites "impressive" Results of the Spanish reforms.
Schäuble is convinced that "Spain has made enormous progress in recent years under the Government of Mariano Rajoy". So much so that now Spain "has a strong economy, reduced labor costs, has significantly increased its exports and has done a good job in restructuring its banking sector, also after the trial of the Troika".What is Shäuble smoking?
Spain, on the right track
In this sense, on financial reform, says that "all international agencies agree that Spain is on the right path" also "regarding to the recapitalization of the banks." Asked if it is all done in the Spanish financial system reform, Schäuble gave their trust to the minister of economy and competitiveness Spanish: "It is my duty to give advice to my colleague and friend Luis de Guindos , he knows better than me what has to do ".
Over four-page interview in the Journal of Vocento, Schäuble never tires of positive messages about the Spanish economy. Not only speaks of "tremendous advances" for Spain Rajoy has achieved, but doubts that at one point made investors wary of the Spanish economy "no longer exists", not least because "Spain reject outright the possibility of not repay the loans made." "The state capital need could not be funded under acceptable conditions. This is the only reason that Spain has had to seek help from the European Stability Mechanism to recapitalize their banks," he added before insisting that "the figures and results "of Spain and its reforms" are impressive. "
Most likely Shäuble's comments are some sort of election ploy for chancellor Angela Merkel. If that's not it, he has lost his mind.
Mike "Mish" Shedlock