Spain has given up the battle to rescue its ailing banks alone and accepted a European bailout of up to €100bn to join Greece, Ireland and Portugal in requesting outside aid to survive Europe's debt crisis.
European leaders hope a bailout will prevent a wider deterioration of the eurozone's fourth largest economy, which is paying punishing interest rates on borrowed money and is key to the survival of the single currency.
"The Spanish government states its intention to request European financing for the recapitalisation of banks that need it," the country's finance minister, Luis de Guindos, said after an emergency video conference with fellow eurozone ministers. It remained unclear, however, exactly how much of the €100bn Spain would need, with De Guindos saying it preferred to wait for two independent reports on its banking system before making a formal request. These reports would be ready within weeks or days, according to De Guindos, who implied that the final sum would be lower than €100bn. "The €100bn sum is a maximum figure," he stressed. "It includes a considerable margin of security."
Eurozone policymakers had been eager to shore up Spain's position before 17 June elections in Greece that could push Athens closer to a eurozone exit and unleash contagion. Various estimates have put the outside capital needed by Spanish banks at between €40bn and €100bn. "The loan amount must cover estimated capital requirements with an additional safety margin," the eurozone ministers said. (source : the guardian)
WELL ---the Spanish (and worldwide) Property Bubble. The gift that keeps on giving. If the Spanish banks own all these properties (I presume they own them), wouldn't it make more sense to sell them off at some ridiculously low price simply to not be carrying these negative assets on their books? The banks are never, ever going to get the ridiculously over-inflated prices that were so common during the heyday of the global property bubble; far better off for the banks to sell these properties for €1,000 or so and clear them off the books. I would imagine if that you could purchase, let's say, a 3 room apartment on the Mediterranean Coast for €4,000 don't think for one minute they wouldn't have buyers. Property prices aren't coming back, at least not in our lifetimes...THAT'S FOR SURE...
10 comments:
If a bailout means the banks are part privatised, then perhaps its no bad thing.
Remember when we didnt bank with Barclays, because they invested in apartheid South Africa, and used the Co-Op bank instead? I think there should be some part-privatised banks run on an ethical basis that we can use for our savings and borrowing accounts.
"If the Spanish banks own all these properties (I presume they own them), wouldn't it make more sense to sell them off at some ridiculously low price simply to not be carrying these negative assets on their books?"
Whole towns are already on sale at ridiculously low prices. You're welcome to wade in there with your chequebook.
What can one say. Widespread graft and jobs for unqualified boys in the banks and a combination of political collusion with it by both left and right, as well as the major errors made by Spanish governments in their spending choices for EU grants, have finally and inevitably ended up with Spain having to be bailed out. You couldn't make it up...
just despair at this. Why do more people not object?
The Spanish Govt is borrowing money on behalf of its people - to be paid back out of their wages - and giving this to private corporations that screwed up. Why?
The banks created non-existent money out of thin air and went gambling with it. Unfortunately, they lost their bets. So they are bust.
But _the public_ do not need to cover their losses. How difficult is this to understand? We have to just stop giving money to the banks!
Let them fail. yes, guarantee personal deposits - so people don't lose out. But pledging all tax receipts for the next 50 years to pay off the debts of some huge company that f*cked up? Who on earth thinks that is sensible?
Do we think the banks will pay the taxpayers back once they've recapitalised / de-leveraged using public funds? Will they fuck. We'll be lucky if they even say "thankyou" before they begin shafting the little people once more.
Privatised profits and socialised losses.
How will the cost of the bailout be payed for? Presumably through the government's obligation to inflict austerity on the Spanish people with longitude and severity, rather than the sane policy which would be nationalisation of these banks and the prosecution of the irresponsible executives and lenders within them.
Your analysis stops short of the awful truth.
The German economy cannot support the rest of Europe alone, but there is also France, and what if Britain joined? That was, after all, why the EU wanted us on board in the first place. Of course, that would trigger a referendum, and who would vote for a United States of Europe in its present state?
But what if the alternative were another European war, that might well trigger WWIII? Who would vote for war? And that is the choice that is looming, and why the EU is content to both stoke the crisis and postpone the awful day with ever more bailouts until the time is ripe.
Britain should pull that rug from under the EU feet by leaving now. But all of the Lib/Lab/Con are committed to our continued membership, so UKIP is the only party worth supporting if you value your country.
Bank of England governor Sir Mervyn King expressed his frustration last month that policymakers were being forced to watch the UK's major trading partner – Europe – "tearing itself apart". At the Bank and the Treasury, the resolution of the turmoil on the continent is regarded as the single most important determinant of when, and how rapidly, Britain will climb out of its first double-dip recession since the 1970s.
In theory, the mooted bailout of Spain's banking sector should have a relatively limited impact on the UK. Britain's banks have an estimated €50bn exposure to the Spanish economy, not least through loans to Brits buying up holiday flats or retirement homes in the sun during the building boom.
However, the banks have already been encouraged by regulators to take write-downs on their Spanish assets. "Most UK banks have been pretty upfront in terms of some of their losses; they've been quite good in their provisioning for Spanish loans," says Michael Derks of broker FxPro
This is great! I used to have to waste time looking in various places for bad news. Now I literally have a dashboard that will give me bad news from each country as it happens. This is like having dual monitors to watch multiple car wrecks at one time.
onother one ...
Italy is effectively bankrupt and this is why:
1) Italy needs to roll-over 200BN to 250BN in debt next year (fornreuters)
2) its GDP is about 1.5Trillion Euros (from wikipedia)
3) so from 1 and 2 one gets that italy needs to refinance or repay debts equal to 13.5 to 165 of GDP
4) if they can't borrow it, and at almost 8% they really can't, then to not defalt they would have to somehow reduce spendign by at least 13% of GDP - that is a lot. Even more if we see as a percentage of govnmt spending. I have not been able to determne how bug italy's govnmt is as % of GDP, but say it was 50% that means they need to cut govnmnt spending by at least 25% (and much more if the gov is smaller)
5)I do not believe that a democratic government can do that (syria or Iran may do it since their armies do not mond kiling their own citizens)
6) the EU economy is 12 trillion euros or so, ther is no wa they can substitute the market to fund italy (as italy owes 2.2 trillion, that is 20% of EU economy
7) So if italy can't fund itself at sustainable rates, the EU can't substitute the market, their government can't afford to pay maturing debt, then they will have to default
I admit there is another option, if they can cut enouigh from govnment to go to a surplus and people believe that will be permanent thenmaybe tey can fund themselves since the surpklue canbe used to paying the debt, however that will require agreement between mopst parties, and all sector of society, and given teir history is not likely
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