Italians Cut Spending in Worst Christmas in 10 Years; Debt in Spanish City of Gandia 50% Higher than Previously Reported; Harsh Times Ahead for All Europe
Spanish City of Gandia is Insolvent
Courtesy of Google Translate El Economista reports The debt of the City of Gandia exceeds 300 million euros
The Deputy Mayor for Economic and Financial Officer of the City of Gandia, William Barber, has appeared before the media to explain and detail the results of the audit report conducted by Deloitte, commissioned by the new municipal government. The result is 300,066,000 euros, although the municipal government of the PP, initially estimated that out of about 200 million.
In this report, it appeared that the City was in a situation of “negative equity”, which obliged the government to take drastic and quick, and to develop an economic and financial plan, presented the mayor this week in Conselleria, to try to address this situation.
Despite the situation, Barber wanted to reassure the public. “While the situation is difficult, we are working to balance budgets, checking all items, although I can announce them or Social Welfare and basic services will be hurt. Our commitment is also paying suppliers not to complicate the situation further not to raise taxes. “
Not an Isolated problem
Every official in Spain repeats the line they will not raise taxes. In the case of Gandia which is in a situation of “negative equity” (bankrupt), how the heck does the city propose paying suppliers?
Gandia is not an isolated problem. Please consider Spanish Implosion Coming Up; Deficit Up, Receipts Down, a Need to Cut 40 Billion in Expenses from 90 Billion; Spain’s “Hidden Deficit” for another take on “hidden deficits” coming to light.
Italians Cut Spending in Worst Christmas in 10 Years
Bloomerg reports Italians Cut Spending in Worst Christmas in 10 Years
Italian retailers had the worst Christmas in 10 years, consumer group Codacons said, as austerity measures to combat the sovereign debt crisis prompted households to cut spending.
Italians spent 48 euros ($62.75) less per person this holiday season than the average of the past five years, Rome-based Codacons said in a statement on its website. The shoe and clothing sector was hit the most, with sales dropping 30 percent from previous years, it said, adding retailers won’t recover the decline during seasonal promotions that start in January.
The discount period “will be a flop,” with sales declining as much as 40 percent compared with 2010, Carlo Rienzi, the head of Codacons, said in the statement.
Prime Minister Mario Monti secured final passage last week for 30 billion euros of austerity and growth measures as he seeks to cut the euro region’s second-biggest debt. The measures, including a tax on luxury goods, a levy on primary residences and higher gasoline prices, may further sap consumer spending and push the euro area’s third-biggest economy deeper into recession.
The austerity plan will cost every Italian family 1,129 euros, according to consumer group Federconsumatori. Italians spent 4.4 billion euros in the holiday season, 400 million euros less than Federconsumatori’s forecast, the group said.
I am trying to get a handle on the percentage decline and the magnitude of the decline. The consumer group estimates “as much as 40 percent” but believe that appears to be by sector, not overall spending.
Courtesy of Google Translate, here is another link from El Economista: The Italian Christmas spent 400 million euros less than in 2010
The Italians spent this Christmas 400 million less than last year, according to a report by the Consumer Federation of ONF, met with another federation Coldiretti farmers who notes that Christmas dinner and lunch on day 25 spent 18% less than in 2010.
According to the ONF, in this Christmas period the Italians spent four billion euros, compared to the 4,400 million provided for the consumer organization, which means that the average expenditure per household was 116 euros, below the amount projected which were already down.
Austerity Kicks In, Harsh Times Ahead for Europe
Translation is not entirely clear. As measured by a 400 million decline from 4,400 million, spending is down 9%, not the 18% Coldiretti farmers reference.
Regardless, various austerity measures will take a direct bite out of Spain, Portugal, Italy, France, and Greece via reduced wages, rising unemployment rate and extremely harsh times.
With the rest of Europe pulling back, and with China cutting back, the export machine of Germany is headed for major problems. Thus, austerity will take an indirect bite out of Germany and the trade surplus countries as well.
Mike “Mish” Shedlock – Global Economic Analysis