The Debt Problem For Spain Essay

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The debt problem for Spain, however, is not entirely only a problem for the government. In fact, most of the debt burden is on households, and non-financial corporations, which together with non-profit organizations (negligible) make up the total value of the private sector debt. We have already analyzed the reason why the household sector accumulated debt, mainly through the real estate crash after the crisis in the first section. On the other hand, the non-financial corporations, represent the local companies that are part of the export and import business, trade with foreign companies or access financing from larger financial banks. Together with the private and the public sectors, the financial corporations sector makes up the value of debt of total economy. Financial corporations consist of all resident corporations that are engaged in financial intermediation or in other auxiliary financial activities. The reason why I emphasize financial corporations is because, although there has been a great amount of debt burden associated with households and especially with non-financial corporations, the financial corporations sector is the one with the highest debt from Spain’s total economy. This can be seen in Figure 6, where the private sector debt is shown in comparison to the public sector debt. After 2000, the private sector started increasing at unprecedented levels reaching its peak (200% of GDP) in 2009. This is almost three times bigger than the public debt.
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