With Spain now officially back in recession, a quarter of its working adults out of work, and its financial sector bombed-out by bad debt the government has announced it is talking about setting up an Irish-style “bad bank”.
It is Madrid’s latest wheeze to try and head-off an unwanted international rescue plan.
After 2011’s horrible Q4 figures, the first quarter of 2012 is the second of declining growth; the definition of a recession. For 2012 the government is expecting a 1.7 contraction in the economy.
Where new growth is to come from is as hard to find as a job in Spain. Unemployment is heading towards the five and a half million mark; three times Germany’s with half the population.
Eleven of Spain’s largest banks were downgraded by Standard and Poor’s on Monday, so the government is looking to free banks of their bad loans to allow them to resume normal operations by bundling all their toxic loans into a state-backed body.
Free the banks, goes the argument, and growth will follow. Spaniards are hoping the government is right.