The pain in Spain
June 18, 2012 2 Comments
Finding a nice news story gets more laborious every day. Trawling through the news and my inbox finds nothing but sad, depressing news about how Spain is about to fall in to the sea along with Greece and the Euro.
All the press releases I get are a direct line to depression. They all speak of “record unemployment”, the “worst crisis” and the “negative outlook”, and this week it’s all about the bailout with Ireland telling Spain to “imagine the worst, and then double it.”
Will Spain be fixed if the IMF throw 100 billion euros at them? Will Spain suddenly be generating growth and employment with that money? Don’t make me laugh! The banks will get the money and Sr. Spaniard on the street will not benefit at all.
For a start, we’re not really sure how much the bailout will be. The initial approval of 100 billion euros has caused quite a stir. However, according to reports the independent audit that is taking place now is likely to put the figure closer to 60 billion. Still a good size bailout but quite considerably less than initial estimates.
But how will the people benefit from capital injected directly into the banks? How are jobs going to be created from this bailout? How will throwing more money at the banks eternally bottomless pit generate growth?
The plan is that the banks get the money and pass it on in the form of cheap loans and mortgages to businesses and private individuals.
There is a huge problem with that though; who wants to borrow money now? If you listen to the government plans you get the impression that the banks are full of people desperate to get a mortgage; business owners desperate for a loan. Where do they get that idea from? This is simply not the case. If people are struggling to survive due to tax increases and salary cuts why does Rajoy think they want to increase their debt burden by borrowing more? That is not the problem Prime Minister Rajoy. People are not spending money because they have no confidence in you, Spain’s economy and the future of the Euro (which was a stupid idea in the first place).
The banks are failing because they are poorly managed. They take our money and stick it in short-term speculative investments, which then fail, and your money is gone. So then they go cap-in-hand to the government who then, with annoying regularity, bail them out.
That is the problem Rajoy. The bank purses have no bottom. Each time you put money in it is simply swallowed up and then needs more. They should be closed down, everyone take their money out and let the failing businesses go.
Take the 100 billion euro bailout fund and plough it into infrastructure. There are thousands of miles of road that needs maintenance so employ a few thousand people to get on with it. We need more schools so build some. There needs to be improvements in infrastructure all over the country so plan for some employment drives with the bailout money. I think Germany, and other contributors, would be happy to see the money making a difference to the people of Spain not just the banks, and more importantly it would create jobs and growth. I’m no financial analyst but the answer seems pretty clear to me. Money to the people, not to the banks. Am I totally wrong? Am I missing something?
At least the Spanish football team are having a good week. Good luck against Croatia today!