A case of mistaken identity ?
Despite the obvious maladies which have afflicted Spain, Portugal and Greece, there are emerging doubts about the role of banks in all these societies. Apart from Politicians, Spanish citizens view banks with increasing distrust and obviously expressed disgust. But is this just a question of misplaced frustration ? Is there anything banks can do after their induced property bubble ? Did a great deal of money from those golden years of outright overdrive exploitation of a single market, go sideways for future main shareholder platforms abroad ? These are disturbing issues which are now beginning to be understood in a country much better acquainted with dictatorships than controlled democracy.
A close study of events and the banking structure in Spain reveals that the failure lies in the calculated strangling of the traditional service which banks were set up to provide – the citizen´s financial support and guidance and corporate development with an eye to creation of employment. The mystery sheds few clues as to where the banking administration went to in view of the strict controls which central banks are supposed to exert (without taking into account the international institutional sensitivity which eventually brings anomalies to the fore – albeit always too late).
It has been suggested that Spain and Greece in particular were not ready for such a sudden and ill conceived red carpet loan path to modern standards of living. The Oligarchy, always in the wings of opportunity would have seen a threat even in the early days. That sort of money in the hands of the average entrepreneur could create a strong middle class which could show up their privileges and monopolistic control of whole sectors of the community. Much of the so called cohesive funding ended up in stoking up a network of corruption which without such indiscriminate funding provoked. Some of the applications of the funding were technically criminal and it would not be long before an alliance with the sympathetic politicians and their families would provide deviant channels that would ensure that the funds would not go towards the support of the small and medium sized employer who could if possible be dissuaded from entering the market. Instead, it would be channeled towards the politically sensitive monopolies which would in turn find markets and fiscal advantages away from their country. The political awakening to the security of their families and a chance to enter the oligarchy for generations virtually became a cultural response to a supply that seemed to turn on merely for the asking. Political cover-ups would ensure with proper lacing of palms that the spectre of judicial proceedings would be far removed from their scene. Only recently and after the collapse of the economy through greed, has this spectre been brought forward but whether it will turn out to be no more than a theatrical display is still to be put to the test.
In Spain the whole social panorama is full to the brim with corruption cases that may well be no more than that. The European administration, however, replete with the support that the major contributing countries were providing, should have been supervised by Britain, Germany and France, appearing it would seem to be fairly unconcerned about seeing their earning go down the drain. Socialist Britain under Blair appears to have been ideologically concerned with spending just as much as the rest of Europe appeared to be doing. Socialist Spain was another case in points although the previous quasi conservative government under Asnar had even backed an expensive war. Was this a case of socialism on a party spree anxious to create entrenched structures future conservative would be unable to remove without conflict ? Perhaps there is a grain of truth in this since idealism has cost many a country its national savings beyond recuperation. However, what emerges is the loss of national productivity and escalating administrative expenditure with bank support that would take both the economy and social standards into a rapid decline hitherto unheard of in times of peace. In Spain, banking became an instrument of the politicians in exchange for ignoring the reckless involvements in the stock exchange through the cartel concepts of pushing and dumping which were illegal in Britain, at least.
Pre-backed corporate launches uniting a variety of potential losers without mention of unsuspecting small shareholders would ensure that the public purse was about to enter a global casino. Much has been written about, but what has not been brought to the fore was the inadequacy of ill prepared traditional forces within the system to handle what literally became a play station in the hands of irresponsible inexperienced youngsters unaccustomed to such terms as moderation, good spread and proper study of form. Instead, one fortuitous killing would be followed by countless mishaps that in some cases were to swallow a bank´s total reserve. The domino effect would of course weaken other banks and countries caught up in the networks and pave the way for a general collapse that would kill the goose that lay the golden egg, which in this case was the average client desperately seeking high interests or merely just allowing the family income to go through the indispensable current account. The truth of the matter in this respect is that practically none of the investment policies that promised so much including the ill- fated mortgage endowments, were to achieve anymore than set the investors back on a false joy ride.
In Spain despite the accumulated institutional protections that Europe itself had promised to maintain and improve, even fraud associated with obtaining monies from clients under false pretenses, were to destroy millions of saver even now incapable of assuming the responsibility of their naivety. Speculative bonds designed to attract the general public with very small print and overzealous bank executives have led millions to thousands of millions losses which are presently untraceable. Despite the nationalizing and ultimate public responsibility of Spain´s triple crash Bankia, renewed funding by Europe , now seemingly disappearing down a hole, investors including those bond holders forced into the exchange for diluted shares, have seen their sole resources shrink beyond rescue. It is patently obvious, that political involvement in the staging of these massive financings of badly run bucket shops, will ensure that unless the victims are paid back their original investment at least, that the issue will carry a sting that will taint credibility in the Spanish Government´s respect for its citizens.