A continuación os reproducimos el artículo que The Wall Stree Journal ha publicado sobre los desahucios en España en el que aparece la PAH.
Pressure on Spain Builds as Bonds Face Key Auction
Madrid Warns It May Seize Local Finances; Bond Yields Surpass High in December
MADRID—Spain warned Monday it could seize control of finances in regional governments as the country struggles to cut its budget deficit, one of Europe’s largest, and shore up investor confidence.
The country faces an important test Tuesday during a planned auction of 12-month and 18-month treasury bills, with longer-term government bonds set for sale Thursday. Spain suffered weak demand at an earlier bond sale this month, followed by a sustained selloff of its debt in secondary markets.
Borrowing costs have surged to four-month highs in past days because of concerns over Spain’s ailing finances and economy.
Madrid’s reach for greater authority over the budgets of regional governments will be welcomed in Berlin and other parts of Northern Europe, where officials view further belt-tightening as the best prescription for the continent’s debt troubles. Germany has led calls for further austerity amid a domestic backlash against the bailouts for Greece and other troubled euro-zone countries.
Spain has committed to reducing a budget deficit that stood at 8.5% of gross domestic product in 2011 to 5.3% in 2012, which would be the largest reduction of any euro-zone country this year. Opponents of deep spending cuts argue slashing budgets in countries such as Spain, where the economy is in decline, will worsen matters.
Spain has become an important testing ground for Europe’s austerity strategy. A failure risks undermining not only Spain’s economy, but the euro as well, some economists warn.
The yield on Spain’s 10-year government bond closed Monday 0.121 percentage point higher at 6.029%, surpassing 6% for the first time since December, when the European Central Bank started offering loans to banks. Banks used much of €1 trillion ($1.3 trillion) received in three-year loans to buy government debt.
Prime Minister Mariano Rajoy presented a 2012 budget last month with €27 billion worth of spending cuts and tax hikes. Some investors worry it won’t rein in regional governments, which account for about one-third of public spending in Spain and make up the bulk of the 2011 budget overrun.
Spain’s regions, which provide such social services as health and education, enjoy a large degree of autonomy but are largely financed by taxes collected by the central government.
Legislation, expected to become law by the end of April, would allow Madrid to make automatic spending cuts in regions that breach budget targets, as well as give the central government power to take over regional finances. A government official Monday said Madrid could move to take control of one or more regions in the coming months.
Mr. Rajoy, who came to power at the end of last year, told business leaders Monday the country has lost the trust of financial markets. He asked for more time to see the results of deep budget cuts, a labor market overhaul and a new plan to clean up Spain’s ailing banks.
“Nobody can expect that deep-seated problems be solved in just a few weeks,” Mr. Rajoy said.
Spain’s economy, which started to contract at the end 2011, is now forecast by the government to shrink by 1.7% this year. The new downturn comes two years after the last one, marking Spain’s first double-dip recession in decades. The government predicts unemployment will hit 24.3% this year, close to a 20-year high. Some analysts predict worse.
Spain’s public-sector retrenchment comes as households and businesses reduce debts accumulated in a decadelong housing boom. Euro membership means Spain can’t devalue its currency to spur exports, and though banks have used ECB loans to buy government debt, many analysts say direct purchases of debt by the ECB, as in the U.S. or the U.K., are necessary to shore up the euro zone’s fiscally frail sovereigns.
Analysts say the labor market reform Mr. Rajoy’s government approved last month will likely increase pressure on the economy. The overhaul has been hailed as one of Spain’s most serious attempts to fix a dysfunctional labor market by lowering high dismissal costs and lifting restrictions on wages and hours.
In the long-run, it is expected to boost productivity and stimulate new jobs. In the short-term, given the deteriorating economy, it could prompt ailing companies to shed more workers.
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“There is a risk that, in the absence of offsetting stimulus through macro policy…structural reforms will make things worse in the short-term, however beneficial in the long-term,” said Simon Tilford, chief economist at the London-based Centre for European Reform.
He and other economists warn aggressive budget cuts and structural reforms, without offsetting economic or monetary stimulus, can send a country into a downward spiral that make debts difficult to pay.
“We’ve seen a plan where austerity doesn’t achieve its desired result, we had that in Greece, and it seems that all are determined to rerun the same plan,” said David Miller, a partner at Cheviot Asset Management in London. “Austerity, when linked to a gathering recession and very high unemployment, is going to lead to lower tax receipts.”
Antonio Arrogante, a 58-year-old high-school math teacher in Toledo, said deep wage cuts for public sector employees over the past two years were “taking the joy out of life.” He said his income has been effectively reduced with combined cuts from Spain’s central government and the regional government of Castilla-La Mancha.
Mr. Arrogante has a son attending a university and has guaranteed the mortgage of his 32-year-old daughter. He said he and his wife, a nurse, are cutting way back on other expenses. They have canceled their cable-TV subscription, along with Friday night restaurant dinners and weekend trips. He said he gave up a pack-a-day cigarette habit for his health—and a monthly savings of €120.
“The government’s budget cuts lead to less consumer spending, which just leads to more unemployment,” he said.
Unions in late March led their first nationwide strike against the policies of Mr. Rajoy, shutting down factories, slowing public transportation and drawing hundreds of thousands of people to evening marches across Spain.
Eugenio García, a 64-year-old retiree at the demonstration in downtown Madrid, said he had come to protest the government’s policies. “Without a doubt they will bring more unemployment and more strikes,” Mr. García said, adding he has two adult sons living with him because they can’t find jobs.
Mr. Rajoy’s conservative Popular Party failed to win control of Andalusia, the country’s most populous region, in recent elections framed as a referendum on Mr. Rajoy’s austerity push. The Popular Party won but failed to clinch the parliamentary majority needed to ensure it could govern. The incumbent Socialists will likely form a coalition government with the United Left bloc to maintain control there.
Mr. Rajoy is aware of the political and economic risks that accompany Spain’s austerity push. In a speech in Andalusia shortly after last month’s elections, he told Popular Party members that “Spain’s situation is certainly very difficult, and it’s even more difficult when you see that measures that are being taken don’t have an effect in the short-term, neither in nor outside of Spain.”
Mr. Rajoy still has a large parliamentary majority that should allow him to push through his program, thanks to his landslide victory in last November’s national elections, Opinion polls give him high approval ratings, despite demonstrations and last month’s strike.
Walking down a street littered with trash, beer bottles and the remnants from a small fire where protesters had gathered in downtown Madrid, Juan Luis Núñez said he was heading into work at the Health Ministry. “I agree with the government’s measures,” the 57-year-old civil servant said, “they are necessary in this situation.”
Others aren’t so forgiving. Francisco Requena, who lives with his wife and 12-year-old daughter in Barcelona, said the manufacturer of industrial cabling where he worked told its 95 employees it was shutting down and laying them off on Feb. 10, the same day the government presented the labor-market reform that makes such mass dismissals cheaper and faster. “I think they knew it was coming,” Mr. Requena said.