True but in a country of 300 million people the measure is meaningful. There are not[1] a lot of such examples. It's not merely tweaking an accounting identity. It can be but in the aggregate, with a sufficiently large number of people, it isn't.
A great example of GDP is government spending. A cut to government spending reduces GDP whether that money is productive or flushed down the toilet. Spain's GDP will shrink simply because the government spends less, the reduced spending should stimulate the local economy by transferring the money back to the people to spend.
> reduced spending should [...] transferring the
> money back to the people
Only if there are tax cuts. If the government cuts spending without cutting taxes, then that does nothing for the people (other than putting a stop to digging the hole they are in). It doesn't put extra money in their pockets.
This is the opposite of the truth. Supply and demand don't suddenly stop clearing because the government cuts spending[1]. Stuff the government consumes is stuff that nobody else gets to consume no matter what the tax rate is. Taxes and debt are just how you pay for it without inflation. This isn't a radical claim, it's Econ 101 stuff, and there are countries that have had economic expansions while running high taxes and surpluses.
[1] Actually government spending does affect the balance of non-government supply and demand, an observation that is a fundamental part of the Keynesian school. But that's a second-order effect, not a first order one.
Maybe I should have been clearer. If the government is spending more money then they are pulling in in taxes, then how does a cut to government spending translate into money in the pockets of the citizens?
If Spain was pulling in $2-billion in taxes, and spending $4-billion by borrowing the deficit, then how does a reduction in spending down to $2-billion give money back to the people? It stops the bleeding of money into debt, but it doesn't give money back to people to then spend on goods/services.
Actually paying the private economy the money you already owe them isn't exactly stimulative. I mean, one would hope the private economy already assumes the bonds it has coming due are going to be paid.
Unless you're implying that investors worried that Spain my default before they personally get paid will pump money into Spain's private economy the moment their personal stake is clear. But panicky investors seem like the last people who would throw money into an economy with dodgy prospects.
And in general, the private economy has shown no real desire to do anything with its money other than hand it to stable governments or sit on it, despite very little return in either case.
So even as bonds mature, the money is not going into the private market at appreciable rates. And, in cases like Spain's, it also isn't likely to be handed directly back to the Spanish government keeping rates low.
It's going to either demand higher rates, sustaining the problematic higher rates, or run screaming for safer harbor.
In short, if investors had any intention of spending their money in Spain's private economy, there'd be no crisis. They would already be doing so, GDP prospects wouldn't be so awful and Spain's ability to meet its obligations wouldn't be in such doubt.
Taking the January and Februry numbers for holders of Spanish sovereign debt, both unstripped (€433 billion held by non-residents) [1] and stripped (€22,4 billion) [2], foreigners own 73% of the central government's outstanding debt.
[1] Added the important word "not".