WHY THE SPANISH LOBBYISTS REMAIN SILENT?

Despite being the European Union's fifth-largest economy Spain is teetering on the brink of a Greece-style meltdown and the silence of Spanish lobbyists is bewildering.

The Spanish economy contracted by 0.3% in the opening quarter of 2012 from the previous stanza when it retreated by the same margin. Private consumption stalled, while investment plunged by 2.6%. The Spanish economy will face a tough year ahead, and we expect GDP to shrink through 2012. This will make it hard for the government to achieve its fiscal deficit targets, and Madrid may have to turn to the EU for help in dealing with its bank problems. 

Spanish industrial production deteriorated further in March. Industrial output fell 7.5% in year-ago terms adjusted for working days, following a 5.3% decline in February. Industry will be under pressure through 2012 because of the government’s austerity measures. Spain's unemployment rate jumped to 24.4% in the opening quarter of 2012 from 22.9%. This was the highest rate in 18 years. Spain has the highest unemployment rate of all European Union countries. Among those aged under 25, nearly half -- 46.4 percent -- are without a job. More than half a million households had no one earning an income in 2011. With the economy already in contraction, unemployment will continue to climb in the coming quarters. Rising joblessness will make it harder for the government to achieve its fiscal deficit target.

Over half the population reports experiencing a heavy financial burden due to housing costs. The number of foreclosure proceedings rose from 25,953 in 2007 to 93,319 in 2009, an increase of nearly 260 percent. The developers have lost their investments, the banks are in crisis, and increasing numbers of Spaniards are homeless.

Sixteen Spanish banks and four of the country’s regions have been downgraded by ratings agency Moody’s . Moody’s blamed the renewed recession, a dramatic deterioration in the country’s property portfolio, funding difficulties and the reduced ability of the Spanish government to support its lenders as its own creditworthiness diminishes, for the move. Spain’s banks have been brought to their knees by a huge, speculative real estate bubble to which the banks had, and still have, large exposure. Currently 60 % mortgage owned banks are bad. That means over 180 billion euros-on loan during the years of euphoria estate (2000-2007)- Spanish financial institutions which never see the color.

The downgrade came as Spain’s government was forced to pay extraordinarily high interest rates to borrow money. Spain has a yield of 4.876 per cent on three-year debt, and 5.106 per cent on the four-year bonds. Ten-year yields rose to 6.314 per cent . 

With such a gloomy perspective the Spanish Government should be calling on "Hired Guns" to lobby the EU institutions, the European Central Bank, the IMF and other international institutions in order to avoid shipwreck but according to the Spanish Minister of Economy "Spain does not need any kind of external support' to save its banking sector. May be that explains why Spanish lobbyists remain silent!