We've been talking about protests and rising yields in Spain ahead of this weekend's regional elections.

WSJ has another interesting angle. As is frequently the case, when one government gets swept out of power, the new government comes in to discover that the old government was hiding tons of "secret" debt that was somehow left off of public records.

Well, the Spanish ruling party is probably going to get walloped in the election. Hence, new debt discovery.

From WSJ:

The "hidden debt" problem first popped up in Catalonia after elections in the fall that resulted in moderate Catalan nationalists unseating a Socialist-led coalition. In December, the central finance ministry said the region's debt-to-regional-GDP ratio was 1.7% as of the third quarter. The old government, in an outgoing report, later disclosed the full-year deficit could be as high as 3.3%.

The new government found that the 2010 deficit was actually 3.8%, thanks to lower-than-anticipated tax revenues as well as millions in unrecorded late payments to suppliers. Among them: EUR852 million in unpaid bills to health-care providers such as hospitals, according to the current government's spokeswoman.

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