Spain has to make 40bn Euros of adjustments in this year’s budget. The government has already found 15bn Euros by means of cuts and tax rises but there is still a lot more to come.
Last week, the Government announced that the golden handshakes to executives from the banks taken over by the state would be cancelled. The 1m Euros that the executives had approved for themselves if they were laid off outraged many Spaniards. Executive pay to nationalised banks was also capped at 300,000 Euros and to those that had borrowed from the state to 600,000 Euros. This means the Rodrigo Rato, chairman of the Bankia Bank will have suffered a 75% pay cut. The fact is the recession in Spain was caused in part by a housing bubble pumped up by loans from the banks that now need taxpayer help like the Caja de Ahorros del Mediterráneo and the Caja Castilla La Mancha.
Now, in a further measure, the pay for executives in state-owned and partly state-owned companies has been cut by up to 35%. For the smaller public companies, salaries have been capped at 80,000 Euros and 55,000 Euros including perks. The number of directors of these companies has also been curbed.
Reading this in conjunction with the stories about British bank executives awarding themselves huge bonuses even though their banks had to be bailed out by the government makes you realise that banks are the biggest thieves in society. The notion that they have to award obscene salaries and bonuses to attract the right people does not sit well with the ordinary investor who has seen the value of his savings drop because of miserly interest rates. These people ‘play with our money’ and lose it because of bad investments but still expect to be paid their high salaries. It’s a bloody cheek if you ask me, I cannot feel one bit sorry for them.