Why is Spain in crisis?

One anecdote from a few that could be told:

I have a student who is a small business owner. The business is office supplies, and by all accounts I think it is fairly successful.

His major client is the regional government, who up to this point have not paid him anything that was invoiced for in 2011.

Next month he has to do his equivalent of a tax return, and pay taxes on everything he invoiced for last year, regardless of whether or not it has been paid. So he will have to pay his taxes to the government for goods sold to the government, while the government have yet to pay him for goods supplied.

He went to the bank to see if he could open up a line of credit to cover him for the payment of the taxes, until he receives his payment from the government. They said to him, “we are not giving out loans at the moment, but we do have a scheme for this sort of thing, it’s through our partners, the regional government”!

So, essentially he will have to borrow money from the government, to pay taxes to the government, for goods that the government have yet to pay him for.

I’ve not got a degree in economics but something doesn’t quite seem to add up here.

Please pray for Spain – “The crooked roads shall become straight, the rough ways smooth.”