Spain is in the eye of the storm. Moody's in fact, it decided, on the one hand, to place the current Aa2 rating under observation with possible negative implications and, on the other, to cut the note to 6 important regions (Castilla la Mancha, Murcia, Valencia, Catalonia, Andalusia, Castilla and Leon), as well as targeting the Basque Country, Extremadura, Galicia and Madrid). Other than "bonos patrioticos", launched at the beginning of the year for an amount of 4 billion euros by Catalonia. Much more would be needed to restore the financial situation of the autonomous communities and of the country.
The firm hand of a new premier is necessary, given that Zapatero's is now shaking in view of the elections, anticipated by the natural deadline of next spring, to 20 September. Spain, therefore, falters. The cost of money is increasingly high, in the wake of a generalized distrust that has led the yields of the "bonos" to exceed 6% and the gap with bunds beyond the threshold of 370 points. All this with an unemployment rate of around 21%, inflation at 3% and a public deficit which is unlikely to fall within the parameters of Maastricht in good time.
This is why Moody's today launched its alarm bell which affects the country, the regions, but also the banks. Giants such as Santander and BBVA (half-year results were lower than expected), but also La Caixa risk a severe cut in their note in the coming weeks. As if to say that Spain is choked with water and needs a radical change (of the Government, of economic and social policy) to be able to change gears and revive growth.
Perhaps, thinking back to the federal model which in recent years has gone too far and is now out of control. Suffice it to say that an autonomy such as Catalonia has a debt of over 30 billion euros, more than a quarter of the total of the regions. Last year the Zapatero government, in order not to lose allies, in fact loosened the purse strings, allowing the autonomous regions to collect 50% of the Irpef (from the previous 33%) 50% of the VAT (from 35%), 58% of special taxes (from 40%). Too much, especially when the crisis strikes hard and begins to affect the fundamentals of the Spanish welfare state: social security and health care.
