I haven't bought the idea of expansionary austerity, but I really believe that the debt levels are far too high, and only managed to get that way because of a huge bubble, largely in the banking sector. Spain borrowed the other day because temporary measures to reflate worked briefly. Monetization or default are the two real options, or a combination.
Spain's problem never was the government, it was private sector housing, funded from abroad. The solution to that is structural, and also involves getting the private sector debts written off, which also means the banks are bust. Bailing these out will add another huge hole on the governments balance sheet, and make it even harder to fund debt.
Spain's problem never was the government, it was private sector housing, funded from abroad. The solution to that is structural, and also involves getting the private sector debts written off, which also means the banks are bust. Bailing these out will add another huge hole on the governments balance sheet, and make it even harder to fund debt.