Kamikaze Economics with Slow-Motion Debt Crash

Wee bit of Contagion? Catalonian default will be seen as Spanish default: Moody’s

“An impending train crash.” Those are the words increasingly being used to describe Madrid’s seemingly intractable conflict with Spain’s separatist north-eastern region of Catalonia. The latest flashpoint in tensions is the political show trial of Catalonia’s former president, Artur Mas, and two other Catalan politicians for their role in organizing a purely symbolic, non-binding referendum on national independence in November, 2014.

Mas has been charged with serious disobedience and other crimes for ignoring a court injunction against the unofficial vote, which the central government in Madrid considered illegal. If found guilty he could be barred from public office for up to ten years.

For Catalonia’s separatist movement, the trial has provided yet another PR coup just as popular support for the movement was beginning to wane. Once again, the outside world is being reminded, no matter how briefly, about the region’s national aspirations and the central government’s increasingly repressive efforts to thwart them.

Upping the Ante

Apart from the estimated 3,000 Catalan-based companies that have upped sticks for other parts of Spain, particularly Madrid where business taxes are lowest, the political tensions and uncertainty have had limited direct repercussions on Catalonia’s macro-economy.

But that could be about to change, what with the simmering war of words and gestures once again reaching fever pitch

Continue reading the article at WOLF STREET

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