In ten years, Spain has repaid 1,020 billion euros of debt, including interest rates. Three times the amount that the State had borrowed in 2000. A massive transfer of wealth punctured on population and public services for the benefit of rich creditors. As in Greece or Portugal …

The Spanish government debt is the cynosure of all Europe, the fact that financial markets (investment banks, vulture funds and insurance companies) continue to speculate on this debt with one goal: raise juicy profits .

And this causes the depletion of the population as a whole, because all this speculation led to a gradual increase in interest payable, in turn reducing other government spending: education, retirement benefits, pension and unemployment, justice, health or social services.

All these austerity measures, equivalent to the structural adjustment plans carried out south of the planet from the 1980s, only increase social inequalities, impoverishment through ever more important people, especially the most (women, ethnic minorities, youth, immigrants, unemployed and retired).

However, contrary to the dominant discourse, it is not government spending, which increased the debt of the Spanish state, but, rather, measures that caused deficits forcing a growing debt, and whose application for the entire population is more than doubtful.

For example, lower taxes on inheritances and donations, on the top slice of income tax and the abolition of wealth tax has benefited the richest, with assets in response to their greed , was also protected by tax evasion, lower taxes on corporations and unit trusts.

Snowball effect

Therefore, the logic is operative to charge to the entire population of the economic benefits achieved by a small number of people who get rich through debt.

But it is not easy to know the exact proportion of the budget dedicated to repayment. This is due to a deliberate policy to cover these issues in the population, made ​​possible by the special nature of the indebtedness of the states, very different from the general understanding that one can have loans to individuals or businesses.

For these loans, lending money (called capital), as interest, to reimburse the As of the deadline. In the case of a State, only the interest on loans (called letters, bills or bonds, depending on whether short, medium or long term) are paid regularly until maturity, while capital must be repaid in full when the loan ends (expires).

For this reason, the usual operation of the States is to borrow again to pay all debt off old debts, allowing them to cover these expenses, because they are balanced on a budgetary basis: expenses for payment maturity equivalent to revenues for issuance of new debt.

However, increasing the debt by a deficiency resulting from poor fiscal management, it increases each time plus the payment, which in turn requires more emissions every time. In addition, the new debt may be issued under different conditions, for example with higher interest rates (which has happened recently), which leads to the classic snowball effect (increase of debt the combined effect of high interest rates and new loans to pay old).

Need for a debt audit

Careful study of the general budgets of the state (available on the website of the Spanish Ministry of Economy and Finance) to verify the amount of money spent by the Spanish State as a repayment of capital in recent years (see table). For example, the principal repayment for 2010 is comparable to the total state budget for this year. If we add interest and principal repaid recently, we see that between 2000 and 2010 the Spanish government paid more than three times what it was in 2000, and still on duty nearly double. This table can also see how the interest and principal repaid, just as total debt continued to rise since 2000 and with the current speculation in the Spanish government debt, this trend is not nearly be reversed.

 

In conclusion, it seems totally unfair to save on public services like education and health to repay a debt in order to reduce a deficit that has benefited the rich.Under public pressure if necessary, the state must open all public debt accounts for the population, based on national and international law, can decide whether to repay what has already been paid several times, and hit cancel debts of illegitimacy.

Thus, the audit of the Spanish debt would reverse the transfer of wealth brought about by the debt service not to the benefit of rich creditors, but destined for the welfare of the population as a whole.

Yves Julien, Jerome Duval ( Patas Arriba , coordination Attac – CADTM) – Valencia

Photo: Photo: Dan Simpson