November 15, 2024

You are here: Home / Archives for debt load

ArcelorMittal Reports Quarterly Loss of $345 Million

May 10, 2013 by Leave a Comment

The loss contrasts with a $92 million profit in the similar period of 2012. Sales for the first quarter of 2013 were down 13 percent year on year, to $19.8 billion.

There were some signs that the company, which relies on demand from heavy industries like automobile manufacturing and construction, may be reaching the bottom of a several-year slide. While steel shipments in the first quarter were down about 6 percent year on year at 20.9 million metric tons, they rose almost 5 percent compared to the fourth quarter of 2012.

Similarly, while sales were down year on year in the first quarter, they were up a modest 2 percent from the last quarter of 2012.

Thomas O’Hara, an analyst at Citigroup, said that the company’s reported Ebitda, or earnings before interest, taxes, depreciation and amortization — the standard earnings measure in the steel industry — was “a clear beat” of analysts’ expectations by about $200 million.

But ArcelorMittal still looks like it has a long way to go before it returns to the high profitability it enjoyed before the onset of the global financial crisis.

“There is a glut of steel supply globally,” said Jeff Largey, an analyst at Macquarie in London. “That is going to prevent a company like ArcelorMittal from making the type of profits it did in its heyday.”

ArcelorMittal continues to whittle away at the heavy debt load it built up during an acquisition spree before the onset of the world financial crisis. The company, which is based in Luxembourg, cut its net debt by $3.8 billion to $18 billion in the quarter largely through a January offering of $4 billion in shares and convertible subordinated notes.

“We have significantly reduced our net debt and the steps we have taken to focus production on our more competitive assets are beginning to yield results,” Lakshmi N. Mittal, the company’s chairman and chief executive, said in a statement.

In Europe, where ArcelorMittal employs more than 90,000 people, the company managed to reduce its losses at the key unit that produces flat steel for auto makers and other customers. The unit posted a $59 million operating loss in the first quarter, compared to a loss of $283 million a year earlier and of $2.9 billion in the fourth quarter of 2012, when the company wrote down the value of some of its European businesses. A $210 million gain from selling carbon emissions credits helped limit the bleeding.

Steel production at the unit was up slightly from the previous year, but the average price per ton fell by 3 percent to $831. ArcelorMittal said it lost $9 per ton on average on the European flat steel unit.

Responding to weak demand, the company has closed operations in Europe, especially at Liège in Belgium and Florange in France, leading to tension with governments and unions. The French government last year threatened to nationalize the Florange site. ArcelorMittal said that although it was closing the blast furnaces at Florange, it has begun a new production line there for modern, lightweight automotive steel with the trademark Usibor.

Even in mining, where Mr. Mittal is focusing most of his investment these days, the results were not stellar. Operating income of $286 million was down 19 percent compared with the previous year, although it was up 54 percent compared with the last quarter of 2012.

Article source: http://www.nytimes.com/2013/05/11/business/global/11iht-arcelor11.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Europe Now Doubts That Greece Can Embrace Reform

January 16, 2012 by Leave a Comment

Officials from the so-called troika of foreign lenders to Greece — the European Central Bank, European Union and International Monetary Fund — have come to believe that the country has neither the ability nor the will to carry out the broad economic reforms it has promised in exchange for aid, people familiar with the talks say, and they say they are even prepared to withhold the next installment of aid in March.

Adding to the anxieties in financial markets, talks broke down Friday between the Greek government and private lenders over a plan to reduce Greece’s debt by $130 billion, a “voluntary” default that the troika has demanded before extending more aid. Those negotiations, aimed at forcing hedge funds and other private holders of Greek debt to accept large losses in order to make the country’s debt load more manageable, will resume Wednesday amid rising concerns about the consequences of failure.

The markets have taken into account a voluntary default by Greece, most experts say. But financial experts fear the possibility of an “involuntary” default if the negotiators are unable to reach an agreement. That could unleash violent market reactions that could conceivably produce another market cataclysm like the 2008 bankruptcy of Lehman Brothers and throw the world into another recession.

Fanning those fears is a growing conviction among the Greek political establishment and the country’s lenders that the old dynamic — with Greece pretending to make structural changes and its lenders pretending to save it from default — has become untenable, people close to the talks say.

As recently as November, Greece and its lenders were optimistic that the country’s newly installed prime minister, Lucas Papademos, a well-respected financial technocrat, would stabilize Greece’s soaring debt and help nurse the country back to health.

But since then, his interim government — stocked not with technocrats but with politicians gunning for national elections as soon as March — has been paralyzed. Although it passed the 2012 national budget, it has failed to put into effect most of the unpopular changes mandated by the loan agreement that the previous government made back in 2010, when the country first admitted it was broke.

“The prime minister is a fine personality — he’s educated, he’s honest, he’s the best you can get around. But no one is helping him,” said George Kirtsos, the owner of a weekly newspaper, The Athens City Press. “Those that take the decisions at a national level believe that Greece will not make it.”

There is considerable posturing in these sorts of negotiations, and the troika has threatened to withdraw aid in the past, only to approve the next loan installment. It may do so again despite its misgivings, because the alternative of an uncontrolled default is too risky. But it will do so only if negotiations with private bondholders can be completed successfully.

But, amid a stream of gloomy news from Europe, including the downgrade of the debt of France and eight other countries, the sense that default is inevitable is growing. “When you simply go over the bare figures I can’t really imagine another scenario,” said Michael Fuchs, a leading member of Chancellor Angela Merkel’s Christian Democratic Union in the German Parliament.

“Mathematics is mathematics, and one plus one has to equal two and not five,” he said, describing how, even with a significant restructuring of its debt, the Greek government’s deficit would still be too large and its economy not competitive enough to put the country back on a sound footing.

That sense can be self-reinforcing as well, making it even harder for Mr. Papademos to push through the changes Greece needs to survive the current crisis.

Greece’s dire economic condition can hardly be overstated. After two years of tax increases and wage cuts, Greek civil servants have seen their income shrink by 40 percent since 2010, and private-sector workers have suffered as well. More than $75 billion has left the country as people move their savings abroad. Some 68,000 businesses closed in 2010, and another 53,000 — out of 300,000 still active — are said to be close to bankruptcy, according to a report issued in the fall by the Greek Co-Federation of Chambers of Commerce.

Nicholas Kulish contributed reporting from Berlin, and Dimitris Bounias from Athens.

Article source: http://www.nytimes.com/2012/01/16/world/europe/europe-now-doubts-that-greece-can-embrace-reform.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Hitches Signal Difficulties for the Euro Zone

October 29, 2011 by Leave a Comment

Italy was obliged to pay the highest rate in more than a decade to sell a new bond issue, a sign that investors remained wary of the country’s political paralysis and a debt load equal to 120 percent of yearly economic output. If Italy’s borrowing costs become unsustainable, the country is potentially a much greater threat than Greece to Europe and the world economy.

“The current Italian government has lost the confidence of investors,” said Alessandro Giansanti, a rates strategist at ING in Amsterdam.

Elsewhere in the troubled euro zone, a big loss by an Austrian bank served as a reminder of the fragility of financial institutions, while a German supreme court decision scrambled efforts to speed up political decision making. In the meantime, the head of Europe’s bailout fund turned to China to invest in the fund.

The shift in mood Friday was sudden and stopped a rally only a day after it began.

On Thursday, major European indexes soared and bank shares rebounded after an all-night session in Brussels by European leaders that produced the boldest response yet to the debt crisis.

While major European stock indexes on Friday largely held on to their gains from the day before, investors seemed to be reflecting on the unanswered questions in the latest rescue package.

The plan, which was short on details, includes measures to bolster the resiliency of banks, to ease Greece’s crushing debt load and to turbocharge the euro area’s $623 billion rescue fund.

The benchmark indexes in Frankfurt, Paris and London were little changed at the end of trading Friday, while Italian shares fell 1.8 percent. The euro barely budged, trading at about $1.42.

The Euro Stoxx 50 index of euro zone blue chips closed down 0.6 percent, while markets in Britain and Paris were also slightly lower. Germany’s DAX was up 0.13 percent.

In the United States, the Standard Poor’s 500-stock index registered a microscopic increase of 0.04 percent, ending the week up more than 3 percent, mainly on Thursday’s lift from the summit meeting in Brussels and a report of growth in the American economy.

European technocrats are now charged with working out in the weeks ahead the specifics behind the broad outlines of Thursday’s plan. The pace is unsettling for markets, but that is the methodical way that European leaders are determined to operate. Elected officials are focused on their reluctant voters, not on investors impatient for bold initiatives.

“If you ask someone on the street, they’ll say they want the Deutsche mark back,” said Martin Lueck, an economist at UBS in Frankfurt. “This is why the politicians need to move in a piecemeal fashion. They need to keep people on board.”

Officials of the European Union and the International Monetary Fund hoped that Thursday’s deal would soothe market anxiety by easing the terms of Greece’s debt repayments enough to avoid default, as well as by building a war chest for safeguarding the larger Italian and Spanish economies against possible contagion.

But the lack of confidence in the plan was evident in the rise in interest rates on the bonds of both Italy and Spain. Benchmark yields jumped 14.4 basis points (about one-seventh of a percentage point) to 6.01 percent in Italy and 17.7 basis points to 5.49 percent in Spain.

Italy was supposed to help its own case this week by producing concrete evidence that it was streamlining its economy and cutting public debt. But Prime Minister Silvio Berlusconi’s government, weakened by internal strife, delivered only promises, handing officials in Brussels a letter of intent describing hoped-for measures.

While Italy has a relatively low annual budget deficit, the ratio of total debt to gross domestic product is second-highest in the euro zone after that of Greece.

The market’s skepticism showed in the auction results Friday. The Italian Treasury sold 3 billion euros of bonds due in 2022 at 6.06 percent, the highest rate since the creation of the euro. Italy also sold 3.1 billion euros of bonds due in 2014 to yield 4.93 percent, up from 4.68 percent at their last auction on Sept. 29.

Elisabetta Povoledo and Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2011/10/29/business/global/italys-borrowing-costs-rise-amid-uncertainty-about-rescue.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Strategies: When a Risk-Free Investment Suddenly Is Not

September 1, 2011 by Leave a Comment

How bad has it been? Despite brief rallies, the Standard Poor’s 500-stock index has fallen more than 13 percent from its May peak. For four consecutive days, the index moved up or down by at least 4 percent, the first time that’s happened.

In a steadily rising market, investing may be a pleasant pastime, like knitting or chess or antique-collecting. Lately, it’s been a blood sport. William Butler Yeats captured the feeling nicely:

Things fall apart; the center cannot hold;

Mere anarchy is loosed upon the world.

There are prosaic explanations for the gyrations that have been unmooring the financial markets. Start with the unseemly squabbling over the debt ceiling in the United States, and the inability of politicians in Washington to come to grips with the nation’s growing debt load.

Then there’s the parallel debt crisis in Europe, which has exposed fissures in the European Union and vulnerability among its major banks. Behind all of that is a sagging global economy — highlighted, in the United States, by a moribund housing market and painfully high unemployment.

While these issues aren’t new, the accretion of them all is like “adding grains of sand to a mound on the beach,” said Mohamed El-Erian, the chief executive of Pimco, the world’s biggest bond manager. “For a while, you add sand and nothing much happens,” he said. “Then with just a few extra grains, the structure starts to shift.”

There has been one significant change in the structure of markets recently, he said. It was partly symbolic, but still disturbing: the Standard Poor’s downgrading of the sovereign debt of the United States. Why is this so important?

It’s because AAA United States Treasury bonds have been the linchpin of the global financial system, and the center of myriad calculations in business, portfolio construction and capital markets.

In this context, Mr. El-Erian said, the downgrade represents a wide perception of instability in the world’s financial structure. “We lived in a world in which ‘risk free’ and United States Treasuries were interchangeable terms,” he said, “a world in which it was assumed that the United States would safeguard its pristine AAA rating, and protect the dollar, the world’s reserve currency.” Now, for many around the planet, the world’s core seems much less solid.

Aswath Damodaran, a finance professor at New York University, says the true rate for a “risk-free investment,” which had been assumed to be the 10-year Treasury yield, now needs to be “approximated,” a procedure heretofore required for emerging markets. “The distinction between developed and emerging markets has blurred,” he said, “and will require a fundamental rethinking.”

Eugene F. Fama, a finance professor at the University of Chicago, said S. P.’s move was “a nonevent in itself, because it merely reflected a view that was already well understood by the markets.” But, he added, it reflected “a great deal of pessimism out there, a great deal of uncertainty” over whether Western governments would resolve their fiscal dilemmas. “Capitalism itself is under duress,” he said.

Mr. Fama, a leading theoretician of efficient markets, said the current volatility “is exactly what you’d expect when efficient markets are confronted by massive uncertainty.”

Not that the Treasuries have been supplanted by another putative risk-free security. In the current crisis, Treasuries have been very much in demand. Their prices have soared, and yields, which move in the opposite direction, have plummeted. Thanks in part to a Federal Reserve pledge last week to keep rates low until at least 2013, the 10-year note fell on Friday to 2.25 percent.

Scott Minerd, the chief investment officer at Guggenheim Partners, predicted correctly in May that the 10-year Treasury yield would dip below 2.5 percent over the summer as the economy weakened and investors sought a haven from greater distress in Europe. Now, he says, long-term government bond yields are likely to remain very low for several years, and the Fed is likely to ease monetary conditions further.

There is more risk in the global financial system, he says, but for canny investors, it has created a “phenomenally good time to buy.” He sees bargains in stocks as well as in municipal bonds. Over the long haul, he said, he’s also bullish on gold, but added that “its recent parabolic rise will lead to a correction, so this isn’t the time to buy it.”

If the American economy doesn’t lurch into recession, and if corporate earnings stay strong, then stocks are far better priced than government bonds, said Tad Rivelle, chief investment officer for fixed income at TCW. For a while last week, the 10-year Treasury yield dropped below the dividend yield on the S. P. 500, a rare occurrence, according to Birinyi Associates, a research firm. It also happened in the 2008-9 financial crisis, presaging the stock market bottom of March 2009.

While there will be opportunities for astute investors, Mr. El-Erian says that in addition to a “new normal” of slow economic growth and high unemployment, we must now also grapple with a weakening of the financial system’s core. “We will be living in a more volatile world,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=e30c8912a442c2ab27b46edb00dd03d9

Filed Under: Your Money Tagged With: , ,

Fair Game: U.S. Has Binged. Soon It’ll Be Time to Pay the Tab.

May 29, 2011 by Leave a Comment

SAY this about all the bickering over the federal debt ceiling: at least people are talking openly about our nation’s growing debt load. This $14.3 trillion issue is front and center — exactly where it should be.

Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy. Written with Marc Hinterschweiger, a research analyst there, the report states plainly: “That government debt will grow to dangerous and unsustainable levels in most advanced and many emerging economies over the next 25 years — if there are no changes in current tax rates or government benefit programs in retirement and health care — is virtually beyond dispute.”

The report then lays out a range of outcomes, some merely unsettling, others downright scary, that face us as a nation if we continue down the big-spending path we are on.

The report, “The Global Outlook for Government Debt Over the Next 25 Years: Implications for the Economy and Public Policy,” arrives when our debt as a percentage of gross domestic product is around 65 percent and rising fast. Much of the recent increase, up from 43 percent in 2007, is the result of the panic of 2008 and the ensuing recession, when the government stepped in to mitigate the damage.

The authors do not suggest that policy makers should hurry to raise taxes or cut spending right now. They acknowledge that the economic recovery is still fragile and propose that lawmakers wait to implement budget cuts currently under discussion until 2013 to 2015. Additional cuts would ideally go into effect in 2016.

What needs to be done now is to design a long-term plan to reduce fiscal deficits in the future. The authors contend that such a program would “reassure the markets, keep interest rates low and instill greater confidence and certainty about future tax and spending policies, thereby encouraging businesses to commit their resources to job-creating investment projects.”

An intriguing aspect of their analysis is how it views the rising tide of debt around the world from a historical perspective. For so many countries to be groaning under so much debt at the same time is unusual, the authors say. More typical are the somewhat contained debt crises, like in Latin America in the 1980s or in Russia in 1998. While both of those episodes reverberated beyond the countries from which they sprang, today’s debt problems are far more widespread. And, as a result, more worrisome. 

The simultaneous buildup of very large public deficits and debt positions in virtually all of the advanced high-income countries “is a new element at work in the global economy,” the report says.

“It is unique in peacetime for so many countries to have so much debt,” Mr. Gagnon said in an interview last week. But he added that global capital markets, and the access to lenders that these markets provide, probably mute the ill effects of this simultaneous borrowing binge. 

The paper assesses the potential consequences of a more pervasive debt crisis, one involving a number of countries in the same perilous position at the same time. The authors also consider the impact that future interest rate increases may have on these debt loads and provide separate estimates of how debt levels would grow under differing circumstances. They incorporate into these estimates expected growth rates in various regions as well as rising health care costs and retirement obligations. The analysis uses figures from the International Monetary Fund and the Organization for Economic Co-operation and Development.

Some of the results are surprising. For example, the study rebuts the commonly held notion that the outlook for Europe is worse than for the United States, as far as debt levels and obligations are concerned. This is because some euro zone countries have already begun to deal with their fiscal problems, Mr. Gagnon explained. “They’ve made some changes to long-run pensions, such as raising retirement ages,” he said, “and they’ve already made spending cuts and tax increases.”

Another surprise in the study: emerging markets are in much better shape, Mr. Gagnon said, than he had anticipated when he began the project.

Now, to the numbers, all of which are based on the status quo in tax rates and government obligations relating to health care and retirement.

You sitting down?

Article source: http://feeds.nytimes.com/click.phdo?i=67bbb00bf7a49fd936886d60fa065fe2

Filed Under: Economy News Tagged With: , ,

Greece Pushes Plan to Raise Cash With Big Sales

May 9, 2011 by Leave a Comment

ATHENS — The Greek government, under pressure from its foreign creditors to raise money by privatizing state enterprises, is facing fierce opposition to its proposed sell-offs from powerful labor unions and critics within the governing Socialist party itself.

No islands or beaches are up for sale, despite the persistent, usually snide suggestions from abroad that have riled many Greeks.

Still, the program that is expected to go before Parliament next week is ambitious. It would authorize the selling of stakes in three utilities: the Greek railway, the race track and the national lottery. Also up for sale or lease are assets including disused venues built for the 2004 Olympic Games and the site of the capital’s former airport, which the government of Qatar has expressed an interest in developing.

In all, the government hopes to raise 50 billion euros, or $72 billion, by 2015 to help avert a default on the country’s huge debt, although many analysts consider that figure to be overly optimistic. By pressing ahead, the government is seeking to demonstrate its resolve in meeting the terms of its 110 billion euro bailout, even as the rating agency Standard Poor’s issued another downgrade on Monday and as European officials discuss ways to relieve some of the debt load.

Indeed, representatives of the International Monetary Fund and the European Union are back in Athens to decide whether to release the next installment of the emergency loan package, estimated to be 12 billion euros. The fact that the Greek budget deficit for 2010 was revised upward, to 10.5 percent of gross domestic product from an estimated 9.5 percent before, suggests that inspectors will be particularly strict this time.

The government insists the privatizations will not be derailed.

“Commentators have doubted the Greek government’s resolve at every juncture of the crisis and in each case the government has proven them wrong,” George Petalotis, a spokesman for the government, said in an e-mailed statement.

The Greek labor unions, however, are determined to stop the sales, fearing that private ownership will lead to downsizing and job cuts. They are lining up a barrage of protests, starting with a one-day general strike on Wednesday.

At the front line is Genop, the union representing workers at P.P.C., the state electricity company. Genop has threatened rolling strikes that could cause lengthy power cuts across the country just as the summer tourist season kicks off.

Speaking Friday in Parliament, Prime Minister George Papandreou promised that Greece “will not give up control of P.P.C.,” even though it was seeking to reduce its stake to 34 percent from 51 percent. He also insisted that the sale would not be done at a “bargain basement price.”

But skepticism lingers at all levels of the governing Socialist party, known as Pasok, particularly about privatizing the power company. Tina Birbili, the energy minister, recently told Ta Nea, a center-left daily, that it was premature to talk about privatizing P.P.C. as its share price was undervalued. It is currently trading at around 11 euros, compared with a five-year average of more than 17 euros.

Greece can sell the race course, the lottery, and even the railway, “but not P.P.C.,” said Alexandros Athanasiadis, a Pasok deputy whose constituency is in Kozani in northern Greece, where P.P.C. has one of its biggest coal-fired plants. “It’s a profit-making company and it provides jobs for thousands,” he added.

With a six-seat majority in Greece’s 300-seat Parliament, the government is unlikely to lose the vote next week, but rebel Socialist lawmakers may push for the bill to be watered down, as has happened with other controversial measures, especially if union pressure mounts.

Indeed, many union leaders are also members of Pasok. In 2001, a previous Socialist government had to withdraw a bill proposing a pension system overhaul following weeks of mass, union-organized street protests.

Those same unions have also managed to keep foreign buyers at bay. In the past 20 years, Greece has attracted only one big strategic investor — Deutsche Telekom, which has a 30 percent stake in the telecommunications company O.T.E.

Deutsche Telekom is legally bound to buy as much as 10 percent more of O.T.E. should the Greek government sell shares by the end of this year, and has the first right of refusal beyond that.

The Greek Finance Ministry said that a French company, Pari Mutuel Urbain, was in talks about the race track, but could give no details of other potential deals. P.M.U. for its part had no immediate comment.

Article source: http://www.nytimes.com/2011/05/10/business/global/10privatize.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Spain Jobless Rate Hits New Eurozone Record

April 29, 2011 by Leave a Comment

MADRID (AP) — Spain’s unemployment rate rose sharply to a new eurozone high of 21.3 percent in the first quarter of the year, with a record 4.9 million people out of work, the government said Friday. The rate was the highest reported by the country since 1997.

Joblessness during the January-March period jumped 1 percentage point from 20.3 percent at the end of 2010, and adds pressure on Spain as it tries to recover from nearly two years of recession and convince investors that it can handle its heavy debt load.

The country is struggling to shift away from dependence on the construction sector, which supported growth for years until the financial crisis popped the Spain’s real estate bubble, as well as make the economy more competitive and reduce national debt.

The number of unemployed people in Spain stood at 4,910,200 at the end of March, up about 214,000 from the previous quarter, said the National Statistics Institute, or INE.

In an unemployment line in a working-class Madrid neighborhood, people grimly waiting to sign up for benefit payments said they saw little hope of finding new jobs for years.

Johnny Albuja, 29, was laid off from his job cleaning offices when the company he worked for lost a contract, but only expected to get unemployment benefits for three months since he worked for the company for just one year.

Over the past year, his father and brother were laid off from a metal works company as demand plummeted.

“The situation is really difficult right now,” Albuja said. “You can’t live well, you still have to pay the mortgage and it’s tough to get by.”

The jobless rate is now at its highest since the first quarter of 1997, when it was 21.3 percent, although officials have since changed the way they measure unemployment, said an INE official who spoke on condition of anonymity in keeping with agency policy. But the overall number of people unemployed is a record, the agency said.

Jobs were lost across the entire Spanish economy, with services, manufacturing, agriculture and construction all taking hits.

Adding to the bad news for households, consumer prices rose sharply, INE said Friday. The consumer price inflation rate jumped to an annual 3.8 percent in April, up two-tenths of a point from March. Higher fuel prices prompted by unrest in the Middle East and North Africa have been pushing the rate up since January.

Spain must hold a general election by March 2012, and polls show the governing Socialists trailing badly. Prime Minister Jose Luis Rodriguez Zapatero has stated he will not seek a third term.

As much of Europe and Germany in particular recovers from the global recession, Spain is forecasting meager growth of just 1.3 percent for itself in 2011, and even the Bank of Spain says that prediction is too optimistic.

The government has said it expects job-creation to improve in the second half of the year. The second and third quarters of the year traditionally boost Spain’s economy as tourists flock to the nation. Spain’s tourism sector accounts for 11 percent of the country’s gross domestic product.

Friday’s report said the number of households in which everyone is unemployed rose by 58,000 to about 1.4 million. It is common for young Spaniards to live at home well into their 30s, in part because traditionally it has been so hard for them to find jobs.

The numbers came out on the same day the government was expected to approve a plan to crack down on tax evasion by flushing out the country’s vibrant underground economy.

Many small- and medium-sized companies have workers whom they pay fully or partially under the counter to skirt tax and social security obligations, and some estimates say the underground economy accounts for 20 percent of Spanish economic output.

___

Alan Clendenning contributed to this report.

Article source: http://www.nytimes.com/aponline/2011/04/29/business/AP-EU-Spain-Financial-Crisis.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,