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Tuesday, March 22, 2016

Paper Money: The Barbarous Relic

April 30, 2012 by · Leave a Comment 

By Jeff Nielson, Bullion Bulls Canada

Gold is a barbarous relic.

Even most ordinary people who rarely pay any attention to topics in the realm of economics will be familiar with this expression. Like most of the Big Lies from the media propaganda machine, our governments have made sure that most of us have heard this one enough times to have it burned into our psyches.

As with most of these Big Lies, this too is a blatant perversion of the truth. It will come as no surprise to gold-bugs and that dwindling minority who advocate sound monetary policies that the reference to gold as a “barbarous relic” was made by the one-and-only John Maynard Keynes. It was from Monetary Reform, a book Keynes published in 1924 – and it was a reference not to gold itself – but to the gold standard:

In truth, the gold standard is already a barbarous relic…

Thus the original reference was made by the most infamous paper-printer in all of history, desperately searching for some insult he could hurl at the gold standard in order to attempt to make his monetary nonsense sound appealing to the Sheep – i.e. the global economics community.

For those not familiar with the mechanics of national economies, the gold standard has often been referred to over history as . How did it acquire this intimidating nickname? Because it absolutely limits our governments from any extreme/insane fiscal or monetary policies without the consequences of those policies being immediately known to the general public.

A government trying to run huge deficits (like the U.S. government was doing during the Vietnam War), would quickly see its “bank account” (i.e. the national gold reserves) quickly evaporate as paying for those deficits emptied the government’s Treasury. Thus ultimately the primary reason that a gold standard is despised (or rather feared) by all the charlatan money-printers like Keynes and the of modern Western economies is that a gold standard forces governments to pay their bills.

However, the fear/hatred of the Money-Printers and Deadbeats toward the gold standard doesn’t end there, it only begins. By definition, a gold standard bases all new currency creation on one’s national gold reserves. Thus these Handcuffs also prevent Keynes and all his central-banking ilk from allowing the printing presses to run wild with new money-printing – quickly destroying the value of any currency with dilution. So in addition to forcing governments to pay their bills it also forcibly prevents them from excessive money-printing. Two strikes against the gold standard.

There is yet a third category of social miscreants who fear/despise a gold standard even more than the charlatan economists and deadbeat politicians – the thieving bankers.  The bankers use excessive money-printing as their primary means of stealing all of the wealth of an entire society. Three strikes against the gold standard!

The mechanics are simple arithmetic and thus totally incontrovertible. When you recklessly dilute the nation’s currency at a rate of more than 10% per year (i.e. the 10+% “inflation rate” for the U.S. as calculated by John Williams of Shadowstats.com), but you only pay people near-zero interest rates on their savings then these people are effectively becoming 10% poorer each year with respect to those savings.

Into whose pocket does all that money disappear? The pockets of the Thieving Bankers, who are legally allowed to print-up all this “money” for themselves absolutely for free. This act of theft; the largest, most blatant, and most pervasive form of theft in the history of the human race has been given an innocuous euphemism by the bankers, and their minions in the media propaganda machine: “fractional-reserve banking”.

The Moneychanger interviews GATA secretary about gold and silver suppression

April 30, 2012 by · Leave a Comment 

GATA

4:54p ET Sunday, April 29, 2012

Dear Friend of GATA and Gold:

Your secretary/treasurer is interviewed in the April edition of the newsletter published by coin and bullion dealer Franklin Sanders, The Moneychanger. The interview covers the gold and silver price suppression schemes and GATA’s work to expose and overthrow them, so Sanders has kindly allowed us to share the entire edition with you in PDF format at GATA’s Internet site here:

http://www.gata.org/files/Moneychanger_April_2012.pdf

Subscription information for The Moneychanger is available here:

http://the-moneychanger.com/about

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA’s full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Join GATA at the Vancouver conference in June

April 30, 2012 by · Leave a Comment 

GATA

3p ET Sunday, April 29, 2012

Dear Friend of GATA and Gold:

GATA will be participating in June’s World Resource Investment Conference in Vancouver, and it’s shaping up to be the biggest and best ever.

In addition to GATA Chairman Bill Murphy, GATA board member Ed Steer, and your secretary/treasurer, many other GATA favorites will be making presentations, including Al Korelin of the Korelin Economics Report, Peter Grandich of the Grandich Letter, David Morgan of Silver-Investor.com, Jeff Berwick of the Dollar Vigilante, financial writer Thom Calandra, U.S. Global Investors CEO Frank Holmes, newsletter writer Jay Taylor, GoldSeek’s Peter Spina, and Doug Casey of Casey Research.

Of course dozens of resource companies will be exhibiting and their executives will be accessible to potential investors.

The conference will be held Sunday, June 3, and Monday, June 4, at the Vancouver Convention Centre East. Admission is free to those who register in advance, and discounted rates are available to conference participants at the two beautiful adjacent hotels, the Pan Pacific and the Fairmont Waterfront.

Vancouver is a spectacularly beautiful and diverse city and it may be on best display in June, so we hope to see many of GATA’s friends there.

You can learn all about the Vancouver conference and register for it and reserve hotel rooms for it at the conference Internet site here:

http://www.cambridgehouse.com/event/world-resource-investment-conference

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA’s full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Mining CEO McEwen cites GATA’s work on Bloomberg TV

April 30, 2012 by · Leave a Comment 

GATA

11:19a ET Saturday, April 28, 2012

Dear Friend of GATA and Gold:

In its struggle against the gold price suppression scheme and surreptitious market rigging by governments generally, GATA long has failed to win support from major gold and silver mining companies, despite our frequent solicitation, perhaps because mining companies are so vulnerable to the scheme’s instigators — governments, which control mining licenses, royalty requirements, and environmental regulations — and to the scheme’s agents and profiteers — big investment houses, which control mine finance, mining being the most capital-intensive industry.

But this lack of support doesn’t mean that GATA isn’t being watched closely by some major miners, as was suggested Friday when Bloomberg Television’s Trish Regan interviewed McEwen Mining CEO and Goldcorp founder Rob McEwen on her program “Street Smart.” Also interviewed was Philadelphia Trust Co. CEO Michael Crofton.

The program’s issue was whether the United States should return to a gold standard, and while the discussion was a bit disjointed, it made plain that the gold issue is a conflict between, on one hand, the international political power amassed by the United States and imposed through its issuance of the only world reserve currency, and, on the other hand, the desire for more limited government and free markets.

 

As the discussion raised the possibility that a massive upward revaluation of gold would be necessary to implement a gold standard, Crofton argued that this would be the same sort of government intervention deplored by gold advocates.

McEwen was cut off a bit before he was able to clarify his counterpoint, but it was that powerful forces are already intervening surreptitiously in the gold market. He said he recently had seen “a very interesting study” showing that the gold price always rises when Asia is trading and falls when London and New York are trading and that anyone buying at the open in New York and London and selling at the close would have lost most of his money for years even as the gold price was rising dramatically over the same period.

Of course that conclusion was originally the work of GATA board member Adrian Douglas and GATA consultant Dimitri Speck and was recently elaborated upon by Sam and Bob Kirtley of SK Options Trading in Wellington, New Zealand, whose work GATA also publicized in January and likely is the recent “very interesting study” to which McEwen referred on Bloomberg TV yesterday:

http://www.gata.org/node/10883

The excerpt with McEwen and Crofton from yesterday’s “Street Smart” program is posted at the Bloomberg Internet site here:

http://www.bloomberg.com/video/91595736/

McEwen’s comment about the “very interesting study” begins at the 5:35 point.

GATA and its supporters may take heart from this, at least as it shows that our work is getting around and becoming a sort of open secret. And our friends are fond of quoting the aphorism attributed to Gandhi that “first they ignore you, then they laugh at you, then they fight you, and then you win.” But your secretary/treasurer suspects that, when the gold price suppression scheme blows up or central bank policy on gold is suddenly and openly changed from suppression to revaluation, the golden codicil to Gandhi’s remark will make it read: “First they ignore you, then they laugh at you, then they fight you, and then you win but are still ignored.”

We could live with that, as GATA was formed to help right a cosmic wrong, not to glorify anyone. But if Gandhi’s remark has to be modified in regard to GATA, winning sooner rather than later would be nice, if only because your secretary/treasurer would enjoy spending much more time this summer outside in his little garden, where mere vegetables are infinitely more appreciative than the most respectable gold mining executives.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA’s full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Eric Sprott and David Baker: When fundamentals no longer apply, review the fundamentals

April 30, 2012 by · Leave a Comment 

GATA

9p ET Friday, April 27, 2012

Dear Friend of GATA and Gold:

The U.S. and European economies are still sinking, money is rushing out of Spain’s banking system, and demand for physical gold is exploding and will blow up the paper gold market before long, Eric Sprott and David Baker of Sprott Asset Management write today in the company’s “Markets at a Glance” commentary. Sprott and Baker write:

“We have written at length about the disconnect between the paper gold price and the physical gold market. If the demand changes stated above applied to any other market, the investing public would lose their minds. Could you imagine, for example, if the demand shifts described above were applied to the global oil market? What would happen if a single country came in from nowhere and increased its oil purchases by a factor equivalent to 30% of the world’s annual oil supply? We are students first and foremost of the physical market, and the numbers stated above speak for themselves. We remain confident about gold for the simple reason that the demand we are now seeing for physical is completely unsustainable without higher prices, and we do not see that demand abating in the coming months.”

The Sprott-Baker commentary is headlined “When Fundamentals No Longer Apply, Review the Fundamentals” and it’s posted at the Sprott Internet site here:

http://www.sprott.com/markets-at-a-glance/when-fundamentals-no-longer-ap…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Big commercials don’t see metals going lower, Arensberg reports

April 30, 2012 by · Leave a Comment 

GATA

8:50p ET Friday, April 27, 2012

Dear Friend of GATA and Gold:

In his Got Gold Report bulletin tonight, Gene Arensberg reports that the big commercial traders have greatly cut back their short positions in gold and especially in silver, indicating that they don’t expect the monetary metals to move lower. Arensberg’s report is headlined “Gold and Silver Disaggregated COT Report for April 27″ and it’s posted at the Got Gold Report’s Internet site here:

http://www.gotgoldreport.com/2012/04/gold-and-silver-disaggregated-cot-r…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA’s full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

American Silver Eagle San Francisco Two-Coin Proof Set Update

April 30, 2012 by · Leave a Comment 

More details have emerged for the 2012 American Silver Eagle San Francisco Two-Coin Proof Set since the first article on the topic appeared here three days ago. As a reminder, the two-coin proof set includes one 2012-S Reverse Proof American Silver Eagle and one 2012-S Proof American Silver Eagle. Whereas before the United States Mint […]
Related posts:

  1. 2012 American Silver Eagle San Francisco Proof Set Scheduled
  2. 2012-W American Silver Eagle Proof Coin Released
  3. San Francisco 2011 Silver Eagle Coins Minted

Spanish Economy In “Huge Crisis” After Credit Downgrade

April 30, 2012 by · Leave a Comment 

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Yahoo! News
By Nigel Davies, Reuters
April 27, 2012

MADRID (Reuters) – Spain’s sickly economy faces a “crisis of huge proportions”, a minister said on Friday, as unemployment hit its highest level in almost two decades and Standard and Poor’s downgraded the government’s debt by two notches.

Unemployment shot up to 24 percent in the first quarter, one of the worst jobless figures in the developed world. Retail sales slumped for the twenty-first consecutive month as a recession cuts into consumer spending.

“The figures are terrible for everyone and terrible for the government … Spain is in a crisis of huge proportions,” Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.

Standard and Poor’s cited risks of an increase in bad loans at Spanish banks and called on Europe to take action to encourage growth.

The downgrade spooked financial markets, raising the interest rate fellow euro zone struggler Italy was forced to pay to sell 10-year bonds at auction. The yield was its highest since January as investors worried about the economic outlook in the bloc’s indebted states.

Analysts said the 5.95 billion euro Italian auction went well under the circumstances, but Rabobank strategist Richard McGuire said the 5.84 percent 10-year yield “leaves a question mark over how long Italy will be able to finance itself at levels that can be deemed sustainable”.

Italy’s main banking association said the economy may contract by 1.4 percent this year, more than the government’s 1.2 percent forecast.

Spain’s country risk, as measured by the spread on yields between Spanish and German benchmark government bonds, spiked before leveling off to around 420 basis points.

Spain has slipped into its second recession in three years and fears that it cannot hit harsh deficit cutting targets this year have put it back in the centre of the debt crisis storm, pushing up its borrowing costs.

Recovery and job creation are still two years off, Economy Minister Luis de Guindos said on Friday in a news conference where he forecast 0.2 percent growth in the gross domestic product next year and 1.4 percent growth in 2014.

De Guindos also said Spain would increase the value-added tax and other indirect taxes next year, but would seek to reduce payroll taxes. Spain has a low VAT compared with other European countries even after raising it in 2010.

The government has already rescued a number of banks that were too exposed to a decade-long construction boom that crashed in 2008, and investors fear vulnerable lenders will be hit by another wave of loan defaults due to the slowing economy.

“It’s a very challenging situation. I don’t think that the banks are cornered yet, but the government must come out soon to say how they will address them,” said Gilles Moec, an economist with Deutsche Bank.

DEFICIT TARGETS DOOMED

S&P’s head of European ratings, Moritz Kraemer, told Reuters Insider television that Spanish banks could need state aid and the country faced further downgrades if its debt troubles continue to escalate.

“It is not going to be an easy job for most Spanish banks to find funding in the market. So the state may be called for at some point. But that, for now at least, is something the Spanish government seems to be unwilling to contemplate,” he said.

Spain has ruled out any use of European funds to recapitalize its banks, weighed down by bad property loans. Economy Secretary Fernando Jimenez Latorre said Spain had sufficient financial capacity to handle a rescue itself in case of need.

The government is considering whether to create a holding company for the banks’ toxic real estate assets after three rounds of forced clean-ups and consolidations in the financial sector have failed to draw a line under the problem.

Conservative Prime Minister Mariano Rajoy, in office since December, has passed an austerity budget and introduced new laws to try to make the economy more competitive, such as by reducing costs for companies to lay off workers. He has also agreed with Brussels a higher deficit target for this year.

But he has not convinced investors, and Spain’s borrowing costs have shot up recently as the effect of a flow of cheap loans from the European Central Bank has worn off.

On Thursday Rajoy said he was determined to stick to austerity measures even though they are aggravating the economic slump and calls for growth measures are mounting around Europe.

The treasury ministry estimated the increase of 365,900 jobless people in the first quarter meant a loss of 953 million euros in tax income, making deficit cutting even harder.

The unemployment rate was up from 22.9 percent in the last quarter of 2011 and was worse than economists had forecast. Half of Spain’s youth are out of work, and figures are unlikely to improve for some time as the government slashes spending by 42 billion euros this year, some 4 percent of economic output.

EUROPEAN ACTION NEEDED

S&P now has Spain on a BBB+ rating, which means “adequate payment capacity” and is only a few notches above a junk rating. Fitch and Moody’s still rate Spain’s sovereign with a “strong payment capacity”.

The ratings agency called on euro zone countries to better manage the sovereign debt crisis.

Standard & Poor’s said the euro zone should implement growth-promoting structural measures, feeding into the mounting debate in Europe about the self-defeating nature of austerity-only or austerity-first measures.

S&P said steps to restore financial confidence should “include a greater pooling of fiscal resources and obligations, possibly direct bank support mechanisms to weaken the sovereign-bank links, and a consolidation of banking supervision or a greater harmonization of labor and wage policies.”

The call for a Europe-wide system to resolve and underpin banks echoed similar comments from the ECB’s Executive Board members Joerg Asmussen and Benoit Coeure.

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The IMF’s Coffers Are Fuller, But The Euro Zone’s “Firewall” Is Still Flimsy

April 30, 2012 by · Leave a Comment 

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The Economist
By The Economist Staff
April 27, 2012

CHRISTINE LAGARDE, the IMF’s managing director, boasted of a “Washington moment”. At its spring meetings in the American capital this month, the fund saw its lending power almost double, thanks to the promise of $430 billion in loans from more than a score of its members. The official goal is to boost a “global firewall” against crisis. The unofficial hope is that a fatter IMF will help ease fears about the euro, by bolstering the €700 billion ($925 billion) that euro-zone economies have pledged in their own rescue funds.

Europeans often simply add the two numbers together, implying there is now a vast $1.4 trillion stash. Not so. Look behind the fat figures and you find a lot of fuzzy maths and wishful thinking—just as worsening news in Spain brings talk of that country needing a rescue (see article).

Start with the IMF. Assuming countries make good on their pledges, the money itself is real. The biggest collective contribution will come from the euro-zone countries, which have promised to lend the fund $200 billion between them. Japan is the biggest single donor, with a $60 billion pledge motivated partly by a desire not to be eclipsed by China, partly by fears about its own economic vulnerability. Big emerging economies, such as China, Russia and Brazil, agreed to chip in. Their contribution, and that of others such as Britain, will be contingent on reforms to the fund’s governance, which reduce Europe’s clout and increase that of emerging economies. (America, notably, did not contribute.)

Barring a big fight over its governance, the fund should be flusher soon. But no one wants to write a blank cheque for the rich euro zone. Canada (which itself did not contribute) called for a double lock: future IMF lending to the euro zone would need to be approved by a vote among non-European members. That probably will not happen, but the fund, at best, will be a minority contributor to future rescues.

So the big bucks will have to come from Europe’s own rescue funds. And they are scantier than they seem. Both the EFSF (the existing rescue facility) and the ESM (a new permanent fund) need to raise resources by issuing debt. The EFSF backs its bonds with guarantees from the dwindling number of AAA-rated governments; the ESM will have some paid-in capital. But both could find it hard to raise the large sums that might be required for, say, a swift bank recapitalisation in Spain.

So speculation is growing that the funds would not bother with hard cash. One idea is for Spain to have a system-wide asset-protection scheme, where the banks’ toxic assets would be insured by euro-zone guarantees. Another is for the rescue funds to issue bonds to Spain’s own bank-rescue fund, just as the EFSF gave Greek bondholders a bond instead of cash as part of that country’s debt restructuring.

Another problem is that both the IMF and ESM are considered “preferred creditors”, which means any borrowing from them is first in line for repayment. If rescue money is sent to the Spanish government to prop up its banks, those same banks’ holdings of government bonds may be worth less. A big rescue could actually end up reducing confidence. The newly thickened firewall is less solid than it appears.

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Spain’s Economic Crisis Deepens As Unemployment Hits 24.4%

April 30, 2012 by · Leave a Comment 

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USA Today Money
By Pan Pylas, Associated Press
April 27, 2012

MADRID – The hole in Spain’s economy is getting deeper.

The government reported Friday that unemployment rose to 24.4% in the first quarter — compared with 22.9% in the fourth quarter — and more than half of Spaniards under 25 are now without jobs. The bleak employment report came one day after ratings agency Standard & Poor’s downgraded the country’s debt.

The Spanish economy is in recession for the second time in three years as the damage from a housing bust persists. Foreclosures are rising, Spain’s banks are in bad shape and the government’s deficit is hitting worrisome levels.

The first-quarter employment data showed that 365,900 people lost their jobs, bringing the number of unemployed Spaniards to 5.6 million. The unemployment rate for people under 25 climbed to 52%, from 48.5% in the previous quarter.

“The figures are terrible for everyone and terrible for the government,” Foreign Minister Jose Manuel Garcia-Margallo told Spanish National Radio. “Spain is in a crisis of enormous magnitude.”

The total number of unemployed increased by 729,400 compared with the first quarter of 2011. The National Statistics Institute said Friday that Spain now has 1.7 million households in which no one has work.

The figures were another blow to the conservative government of Mariano Rajoy after Standard & Poor’s late Thursday became the first of the three leading credit rating agencies to strip Spain of an A rating. It cited a worsening budget deficit, worries over the banking system and poor economic prospects for its decision to reduce the rating two notches from A to BBB+.

S&P even warned that a further downgrade is possible as it left its outlook assessment on Spain at “negative.”

Spain, the eurozone’s fourth-largest economy, is just now just three notches above so-called junk status. Earlier this week, the Bank of Spain confirmed that the country had two consecutive quarters of negative growth, the rule-of-thumb definition of recession.

The country’s economic problems have become the epicenter Europe’s debt crisis in recent weeks as investors worry over Spain’s ability to push through austerity measures and reforms to trim government debt at a time of recession and mass unemployment.

The cuts are aimed principally at slashing the government’s deficit from 8.5% of economic output to the maximum level set by the European Union of 3% by 2013. For this year the goal is 5.3%.

With the economy shrinking and the population restless, there are concerns the government will not meet its targets and will be forced into seeking a financial rescue as Greece, Ireland and Portugal have done.

The difference is that Spain’s economy is double the size of the combined economies of the three countries that have already been bailed out. The other eurozone countries would struggle to muster enough money to rescue it.

The government later Friday released a flurry of upbeat data on how it plans to turn the economy around between 2012-2015. Despite the dismal job numbers, it predicted a roughly balanced budget in 2016.

But there was more pain, too. Economy Minister Luis de Guindos announced an increase next year in indirect taxes. He said this measure will raise €8 billion ($11 billion) in new revenue to help chip away at the deficit.

The conservative government has already raised income and property taxes, and announced cuts in spending on health care and education. The forecast is for the economy to shrink 1.7% this year.

Foreseeing the economic downturn, businesses have been laying people off at a faster rate than expected, said IESE Business School economics professor Antonio Argandona. New laws also make it easier for companies to shed workers at low cost.

Argandona said Spain is not yet at risk of needing a bailout because its government is still solvent. But even if the economy returns to growth next year as forecast, the jobless rate will lag and unemployment could hit 26%, he said.

The mood among Spanish people on the street Friday was downcast.

“The situation is very bad. There’s no work,” said Enrique Sebastian,a 48-year-old unemployed surgery room assistant as he left one of Madrid’s unemployment offices.

“The only future I see is one with wages of €400 ($530) a month for eight-hour days. And that’s if you can find it,” said Sebastian.

Markets in Spain initially reacted negatively to the debt downgrade and unemployment news but soon recovered their poise alongside the rest of Europe as the debt downgrade was largely viewed as a belated acknowledgment of market realities.

The main IBEX index, having fallen more than 1% earlier, recovered and was up 1.2% in early afternoon trading. Meanwhile investors sold Spanish bonds in a show of jitters. The interest rate, or yield, on the country’s ten-year bond was up 0.07 of a percentage point to 5.87%, having touched 6% earlier.

Though the yield is below the 7% rate widely considered unsustainable in the long run, it has edged up the past month from below 5% in a clear sign investors are fidgety.

Gayle Allard, a labor market expert at IE Business School, said while a jobless rate of 24.4% is terrible, Spain is traditionally a high unemployment country. Three times in the past 30 years unemployment has exceeded 20%, Allard said.

“It is something that, somehow, they live with. Things go underground. I don’t know what they do. They hide money in good years and they pull it out in bad years,” Allard said.

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