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-- from 5%.
It's crazy and we'll speak -- -- Spain thousands of people let fled into the streets of Madrid over the weekend.
Protesting austerity and clashing with riot police the demonstrations coming as the government said.
It's that's gonna rises much as much more than forecasted.
Our next guest says he's been following Spain's -- closely and Arafat just last week his firm cut its rating on the country for the seven.
Time this year joining us now -- he and co-founder and president of Egan Jones.
Sir I'm glad you're with us you know you can't help but think.
The country's making all these budget cuts and that's taking away more jobs unemployment close to 2.5 percent.
Should -- be flood on the market -- liquidity like we aren't.
Well I think you wanna step back and solve the underlying problem with it in unemployment that they 25%.
Love all and in fact that this stated unemployment the real unemployment is much higher than that.
They have to realize that there's some significant.
That intractable problems in Spain.
I think at the top the list is a relatively high debt that that that can't be paid back no matter watch it can't be paid back.
Increasing taxes increasing austerity is not going to solve the problem.
Spain is going to need about another 200 billion euros just to get them through the past -- next that twelve months.
For both the Kingdom of Spain the bank says Spain the regents and the power generators.
C have a lot of difficulty there -- and the best state the best way to deal with these problems typically is to recognize them quickly.
He get to a sustainable states is letting it fast there is not in anybody's interest right.
And and according to their budget their debt load will increase not only this year but next year as well.
So -- -- point.
You know the market cheered actually the other day when they announced tax increases in spending cuts you don't sound like you believe any of it should Spain asked for bail out then.
They did they should -- more than about what they should ask for one thing is they should cut that debt -- did they simply can't pay it back.
With the deficits federal government deficits in the area about 9% per year.
The with the God's country not growing the GDP not growing.
Big government debt increases about nine and a half percent per year.
-- as of next year will be closed about -- 2% the year after that -- over a 100%.
-- -- a recognition quickly that they have some underlying problems they need to address.
But if they get their bailout does that -- president then for the rest of the eurozone because there will certainly be other countries -- idea of lining up to collect their money as well.
I it's already happened in fact -- has asked for us some support Ireland has asked for support -- -- ago.
Did did basic underlying problem is that the productivity in the northern part of Europe has grown a lot faster than it has in the southern part.
When you're taking about 300 dollars worth of plastic and -- on converting it into a 70000.
Dollar BMW or Mercedes.
And you can do that with more machines and he used to before.
Verses the Al waiter may be are working -- there are -- are trying to grow faster.
It's obvious that the productivity rates in Northern Europe are growing a lot -- Southern Europe.
So that's one of the major problems -- need to be addressed through the next couple years you know the meantime you have to cut the debt.
But you -- them out.
Cutting you know that's the ripple effects of cutting the debt -- means a lot of people are not gonna get paid back.
That doesn't help the entire eurozone I can't imagine Germany in the countries that are trying to hold on during all this.
Are going to accept something like that.
No and they're not.
Typically what they do if they go and they make massive constitute government employees massive cuts to.
Government expenditures they cut that that and they cut the currency.
And you're -- DI MF has not been driving at they've been pushed this side by the European politicians.
And this thing has been festering for the past three and a half years.
I think over time they're gonna realize that they they have to address it fairly quickly or us the country has just gonna slip further.
And they are doing -- already shining in thank you for being with us are.
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