Friday, May 20, 2011

World View — Spain: Huge Amounts Of Hidden Debt

by John J. Xenakis May 20th 2011 at 5:52 am

This morning’s key headlines from
Weekend elections in Spain may uncover huge amounts of ‘hidden’ debt
Weekend elections are threatening to drive Spain’s ruling Socialist party from power in several regions. They’re also threatening a nasty surprise: to uncover billions of dollars of “hidden debt” owed by local governments to health clinics and other suppliers. There is widespread, unrecorded debt among once-free-spending local governments. Some companies are complaining that fiscally frail administrations are pressuring them to do business off the books and not immediately bill for goods and services. This would be another potential disaster for the euro and the European Union. Wall Street Journal (Access).
Angry fight between EU and ECB over Greece becomes public

Yields (interest rates) on 10-year bonds for Greece, Ireland, Portugal and Spain (Reuters) 

The European Central Bank (ECB) is “playing its last card” and threatening to refuse to accept Greek bonds as collateral, if the European Union (EU) approved the proposed “soft restructuring” of Greece’s debt. ECB officials have been warning for weeks that any debt restructuring, or any form of default, would have catastrophic consequences for the euro zone. However, some economists are saying that the ECB threat is just a negotiating ploy, and that they’ll be forced to accept Greek bonds, no matter what happens. Kathimerini

ANC losing ground among black voters in South Africa
South Africa’s African National Congress (ANC) party has bee winning elections by 60%+ majorities continually since 1994. But in Wednesday’s municipal elections, the opposition Democratic Alliance began to successfully challenge the ANC for the first time, winning some victories. The ANC is the black liberation party following the end of apartheid, and originally led by Nelson Mandella. The DA opposition party is considered to be for whites and those of mixed race. Black voters are switching allegiance away from the ANC to the DA because the ANC is failing to provide basic services — running water, sanitation, schools, health care, housing — to the poor blacks, while all of these services are usually available in white neighborhoods. Bloomberg

Iraq and Kuwait in potential row over new deep water port
Plans by the Kuwaitis to begin construction of “Mubarak port,” a deep water port just over the border from the site of a new Iraqi port currently under construction, is causing tempers to flare. The two ports would compete for shipping business. The move has caused historic tempers to flare. Iraq invaded Kuwait in 1990, leading to American intervention and the Iraq war. Iraqi activists have called for the closure of the Kuwaiti embassy in Bagdad, and expulsion of their ambassador. Iraqi Prime Minister Nuri al-Maliki ordered the formation of an emergency committee to travel to Kuwait immediately to tackle the dispute between the two countries. Kurdish News Agency (Iraq)

Kim Jong-il’s son makes first diplomatic visit to China
There are reports that Kim Jong-un, the heir apparent youngest son of North Korea’s leader Kim Jong-il, is visiting China for the first time without his father. Last September, the son was named vice chairman of the Central Military Commission of the ruling Worker’s Party and a four-star general, apparently in preparation for becoming the new leader. Yonhap

Kenya: Maize to run out in 10 days
According to Kenya’s Cereal Millers Association that represents 26 millers, they are holding between 400,000 and 500,000 bags of maize, enough to last for ten days. “Supplies are fast drying up and farmers are not selling,” said Diamond Lalji, the millers’ chairman. “If we don’t get more supplies, there will be no unga (flour) on the shelves in the coming days.” All Africa

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