Concern grew for the stability of Spain's place in the fragile eurozone economy after reports of a rise in the level of bad loans on the books of its banks and word from the government Friday that it may have to revise its 2011 budget deficit upwards for a second time.
Reuters reports Eurozone Unemployment Reaches Near 15-Year High
Unemployment in the euro zone reached its highest level in almost 15 years in February, with more than 17 million people out of work, and economists said they expected job office queues to grow even longer later this year.
By Valentina Za and Silvia AloisiMILAN (Reuters) - A drive by Italian banks to come clean on bad loans during a European bank health check may force them to raise as much as 20 billion euros in capital, three times more than that penciled in so far, to shore up their balance sheets.
One of the mysteries surrounding the insolvent, and already once bailed out Spanish banking sector, has been why are reported bad loans - sharply rising as they may be - still as low as they are currently. Courtesy of the just completed bank earnings season, and a WSJ report, we now know why: it turns out that for the past several years, instead of accurately designating non-performing loans, banks would constantly "refinance" bad loans making them appear viable even though banks have known full well there would be zero recoveries on those loans.
Until recently, the received wisdom in the city was (a) was that the steep rise in the oil price would be temporary and (b) that it would only cause serious problems if it went to $150 a barrel. At least one of those two beliefs is now being tested. Possibly both.
From a technocratic point of view, I agree with the idea that it makes sense to pair short-term stimulus (i.e., bigger deficits) with measures that reduce the long-term deficit. In practice, however, I don’t think it makes sense to spend 2010 & 2011 worrying about what the deficit may or may not look like in 2047.
On an exciting phone call with progressive internet writers earlier this evening, a senior administration official outlined the Obama administration’s plan to call for a freeze in non-security discretionary spending spending starting with the Fiscal Year 2011 budget.