WHEN THE BCE BUYS DEBT IT PUBLISHES THE STATE HE SHOULD BUY PRIVATE DEBT

The financial movements in countries like Switzerland are giving the warning that the performance of the BCE on the setting in march of the (QE) it is immediate, I wrote yesterday that the focus that the bank is forced to make in these purchases didn't consider it exactly, because at the end the biggest quantity in serious bought debt the German, for its security and because it is the country with the GDP higher conditions that they will give the percentage of purchase of the respective debts of each country. 

It is more than probable that my solution of buying debt inversely in a relationship proportional to these factors, that is to say that to better situation economic less debt it is bought, Germany won't allow it, the question is that in Spain the public debt is not in some untenable neither dangerous indexes, if you reactivates the economy of the country, but when I complain about the Spanish debt and I am alarmed it is in fact because I don't see like you can reactivate the country, because the reality after the data of 2014 is that the GDP stagnates and the IPC goes back, that is to say we are installed in the recession or the deflation gives similar to which worse. 

Today I have read a very interesting article in Expansion with respect to a study of the professor of the University Pompeu Fabra, José Luis Peydró in that it can be the solution to the problem of the reactivation of the economy and the private consumption and for consequence of the economy of Spain. The question is based on fixing the Spanish private debt as much as possible and not the public one, reading this reaches the conclusion that won't buy private debt as the BCE, what could make it is been that it is the Spanish state the one that applies the revenues of the public debt sold the BCE, in to buy or to redeem Spanish private debt that is in fact the wrong of the country and its economy.    

In 2007 Spain he had a public debt of 35,5% of the GDP, one of the lowest ratios in all Europe; however the private indebtedness was of the highest (206% has more than enough GDP). Also, such and like the professor, great part of that financing points out it came from the exterior, already outside for direct petitions of financing of the big Spanish companies to foreign banks, or for the flow of capitals between foreign banks and Spaniards that these they finished becoming credits to families and “pymes” (small and medium enterprises). 

When the financial crisis exploded, banks and companies had serious problems to refinance those debts, for what the public sector decided to leave to the rescue, of the banking naturally. The intervention of the administrations in the rescues together with the descent of the public revenues propitiated an express and strong increase of the public debt that it has not overcome even this way 100% of the GDP. However to day of today, the total debt in Spain (without counting the financial sector) it ascends something more than 270% of the GDP this debt ratio 97% it is distributed on the GDP of the public sector, 77% families and 100% non financial companies.     

To compare the situation we take as example Germany he has a debt of the order of 190% of their GDP and it is distributed 78% public sector, 57% families and another point the companies. As you he can observe, the great difference between Spain and Germany is that the indebtedness of the private sector in the German country is very inferior, what allows to the families to continue consuming and to the companies to continue investing. For that reason, the professor of the Pompeu Fabra believes that it would be more important and more beneficial to restructure the private debt that the public one that yes it can end up being sustainable. 

Also, the debt public Spaniard is in its majority in residents' hands, for that that a restructuring (usually this would be one it removes) of the same one, it would affect from a direct way to several national sectors, while the private debt has a very outstanding portion in foreign hands that are worthy of banks and Spanish companies. A restructuring of the private debt with the help of that through the state you can redeem this debt in the external markets would allow that companies and families enter in the circle of the economy with consumption and investment again, without affecting too much to the national sectors.