Wednesday, May 30, 2012

Bullshit And Bulerías In Bankia

It's now over 3 weeks since I last blogged on the subject, but the crisis over the bailout of Bankia rages on. As each week passes we learn more about the colossal disaster that the bank has become. The amount needed to save Bankia seems to rise almost every day and the disastrous handling of the issue by the government came dangerously close to provoking a run on deposits in the bank.

More than just being another episode in an ongoing financial crisis, the Bankia situation does show every indication of being a full blown scandal. How is it that a bank which announced profits of millions of euros and which was still talking of making new acquisitions just a couple of months ago has been revealed to be a wreck with such enormous losses? 

The government is doing everything it can to avoid any kind of investigation into what has happened, criminal or otherwise, and is getting some help from the PSOE. The PP have tried hard to put all the blame on the outgoing governor of the Banco de España, who does deserve his share of criticism. But then we are still left wondering what exactly Rodrigo Rato and friends were doing in return for the millions they took out from presiding over the bank?

As usual in these situations it's the little people who take the hardest hit. Given the lack of interest from the big investors, Bankia mobilised its whole commercial network to sell shares to its own customers. I know personally of one case where €3000 was simply deducted from an account without consent in return for what would now be a virtually worthless shareholding. The 'mistake' was of course corrected, but I wonder how many other cases there were.

The PP have blocked the possibility of parliamentary investigation, even though they could easily use their parliamentary majority to convert any investigation into a circus. What should be happening is a full criminal investigation to examine what really happened inside the bank. Best wait for that sitting down, as the Spanish like to say.

It says an awful lot about the way this government operates that the announcement of how much public money Bankia needs was made by the newly appointed president of the bank, with a figure way above anything which had been suggested by government ministers. Then there is the (deliberate?) confusion over the way in which the bank will be rescued. True to their ideology, the government is making it fairly clear that there will be no general public benefit in return for €19,000 million of help.

The only response to criticism of their handling of the crisis has been attempts to distract public attention. Anything will do, the spat with Gibraltar, the chorus of whistles that greeted the national anthem at the Spanish cup final. All with the help of servile newspapers who find day after day that Bankia is not a significant enough issue to make the front page.

Spain's government is being crushed by the weight of its own mediocrity and inability to respond to the situation. After Mariano Rajoy's surprise press conference the other day, there are now not so many criticisms of his refusal to explain events. Because it has become evident that he doesn't have an explanation to offer, merely a collection of recycled cliches. The problem with this government is that they have the capacity to make the outcome of the crisis even worse for Spain because of their determination to politically manipulate the situation the country faces.

Some will be happy at the suggestions that the EU is now demanding even more cuts in return for possibly relaxing a budget target that nobody seriously believes to be achievable in the first place. However, the argument that this is a crisis of public debt looks more and more frail every day. It's about public resources being used to prop up the private sector. There are some absentees from the list of those accused of mismanaging the banking crisis, because those who control Spain's biggest banks have been instrumental in driving the disastrous strategy. Happily, not everybody is taking this situation lying down.


1 comment:

Anonymous said...

One thing to consider, is that Spain does not have some of the government sustained perks other countries have. For example in France the government subsidises the rent for young people massively, in Spain only a minority could access this help. Again , in the UK, pensions for learning disabilities, house support, council housing exist and are accessible to a wide strata of the population. The social benefits in Spain were never that good (apart from some populist driven measures like the "cheque bebe" ). Spain chose ( or it just happened, god knows!) to have free education and minimal fees in the university and a public hospital driven health care system. Women are not helped to look after their kids ( that is the grandparents role), grandparents are looked after by the daughters in law ( that is the daughter- in - law role) , etc..
The government saves a lot of money with this system, and now all future progress is frozen, no more progress , nothing!
The extreme right that governs us, will engourage this, because it will force women to get low paid jobs or part time jobs ( i.e. less pension), it will also affect the lower classes who cannot afford to pay for healthcare, and it will put sick workers at the mercy of their employers.
The public debt is not the problems, being governed by a bunch of mediocre politicians is!