Yesterday, in class, we talked about the economic crisis in Spain and tried to pin down the blame. It seems that a large percentage of the population blames the banks.
You will recall that the former prime minister reassured us that the banks were “solid, controlled and impermeable”. He said that they didn’t need injections of public money because they were “safe and secure”. Even the current prime minister told us that he was confident of Spain’s healthy banking system.
Now we all know better because the Banco de Valencia needed aid, then the CAM bank and most recently Bankia. We are talking about millions of Euros spent to prop up these ailing institutions.
Although Spanish politicians might still be confident that the countries banks are safe, Europe isn’t which is why they are sending in independent auditors to assess the health of these institutions. What they will find is anybody’s guess. For sure they will discover just how many politicians from both parties are well paid as directors by the banks.
During the building boom, dozens of different banks were formed all awash with money to lend buyers and developers alike. As the builders went out of business and homeowners defaulted on loans, the new banks were left vulnerable. The Cajas, or savings banks reduced from 45 to just nine and 3,100 branches were closed putting over 15,000 employees out of work. The only people smiling are the executives and directors, many of whom turn out to be politicians. They are still enjoying their “fat cat” salaries whilst over 24% or the population are out of work.
So the answer to the question really is a mix of banks and politicians who are equally to blame for the mess that the country is in. I hope they sleep well at night!