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Spain’s bad banking joke

Despite an infusion of tens of billions of euros funded by citizens now left with huge debts and a downsized welfare state, Spain’s nationalised banks are providing fewer loans to the credit-starved economy than private lenders. It’s all a very bad joke, says Vicente Clavero

If something clearly reflects the huge bad joke being played on ordinary citizens in this economic crisis it is what is happening in Spain with the banks. Thanks to disastrous management, driven most of the time by greed, pure and simple, a financial system that was once regarded as one of the strongest in the world was sent to hell. And if it has not gone there, it is because all of us, with indescribable meakness, have shouldered the costs, racking up debts for god knows how many years to come.

The high price of that generosity, which was not spontaneous, but imposed by Mariano Rajoy’s Popular Party administration of today and the previous Socialist government of Jose Luis Rodríguez Zapatero, can be seen in the public deficit.

Despite all the sacrifices made by the Spanish, the size of the deficit in 2012 relative to gross domestic product (GDP) rose compared to 2011 because of the 40,000 billion euro banking rescue. Of little purpose, then, the cuts in health, education, social services and pensions, or tax increases, the theoretical aim of which was to achieve fiscal consolidation that couldn’t be postponed.

In return for that torrent of money, the state has been left with the dregs of the financial sector: Bankia, Catalunyacaixa, Novagalicia and Banco de Valencia. But not in order to to use them as a catalyst for the economy. On the contrary, the ​​government’s idea is to clean them up and get rid of them as soon as possible, by giving potential buyers the greatest possible advantages, and treating the banks as if they were strictly private.

The latest Financial Stability Report from the Bank of Spain provides conclusive evidence of this. The four nationalized entities granted only 20% of loans requested of them, compared with 30% for the whole sector. This means that instead of contributing to the release of credit, which is the main obstacle to recovery, all they are doing is making things even more difficult for businesses and hindering job creation.

It is also irritating to see the behaviour of some of them towards citizens that should deserve more consideration. It is intolerable that Bankia, for example, continues with its policy of evictions, or Novagalicia shows no regard for the just demands of people who, as part of the nationalisation process, face losing ‘preferential’ bank shares they were duped into buying. Given the price people have paid for the recapitalisation of these banks, the least the State could do is to require its banks not to forget who is paying – lest we are not only made cuckolds but, for good measure, beaten up as well.

El Publico 14 May 2013

Translation by Revolting Europe


About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope


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