News Links: Spain becomes eurozone’s weaker link

Spain Set to Vote for Rajoy Cuts as Crisis Claims Fifth Leader – BloombergSpaniards may hand the biggest majority in three decades to opposition People’s Party leader Mariano Rajoy as polls suggest Europe’s debt crisis will push a fifth government from power. Rajoy will win as many as 198 of the 350 seats in Parliament in tomorrow’s federal elections, the largest majority any Spanish government has secured since 1982, polls show. Set to inherit a 23 percent jobless rate and the highest financing costs since Spain joined the euro, Rajoy has pledged to deepen spending cuts and overhaul the economy after a four-year downturn.

BBC News – Spain becomes eurozone’s weaker linkIn 1989, Spain’s ratio of government debt to GDP – the value of what the country produces – was just 39%. Its ratio of corporate debt to GDP was 49%, the ratio of household debt to GDP was just 31% and financial sector debt was just 14% of GDP. The aggregate ratio of debt to GDP was 133%. By the middle of this year, the picture was utterly different. The aggregate ratio of debt to GDP had soared to 363% of GDP. And it was really from 2000 onwards, the euro years, that Spain really got the borrowing bug, with the ratio of aggregate debt to GDP rising by a staggering 171 percentage points of GDP. The biggest increment over the past 20 odd years has been in the ratio of corporate debts to GDP, which has soared to a staggering 134% of GDP. Spanish companies have become addicted to debt.

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