Mario Lopez writes from Madrid: Well, there you have it. Spanish banks are getting a huge bailout from the European Union while the rest of the economy will be allowed to continue going down. And the funniest thing of all is that no one in Brussels is even trying to deny that this is a blatant attempt to protect the banks in Germany, France and Britain that have an enormous exposure to the Spanish banking sector, something like 200 billion euros at least. So the 100 billions euros that are going to supposedly save the Spanish banks will end up eventually in the banks of the big three, with the struggling Spanish people seeing none of it.
The Spanish government is playing along with this disgraceful scheme, claiming that this injection of money into the country’s banking system is not a bailout like the ones that were provided to Ireland, Greece and Portugal but just a prop up of the financial system. How Spanish ministers manage to keep straight faces when they say such rubbish is a mystery.
Meanwhile stunned Spaniards would like to know how it could have happened that their supposedly conservative government went along with this blatant rip off of their country. The big question that everybody is asking is this: how at a time of a severe recession can Spain take a huge loan from the EU that would not reach the real economy but be used to service debts to foreign banks?
It is quite amazing that politicians, both in Madrid and in Brussels, are treating people with such contempt that they don’t even bother to explain the latest EU bank bailout. And on top of that Germany, France and Britain are nodding in agreement, praising the move as if it makes perfect sense. Do the money men have total control over the European governments and so are able to squeeze as much money as they want from the taxpayers? And don’t bankers understand that if they continue to rob whole nations the whole European economy will collapse burying them under the rubble with everyone else. These huge injections of public money into the banking sector deprive the economies of much needed funds and are only used to service debts and make new debts. Not to mention that in this time of severe hardships some of this money is used by banks to set up supposedly ‘independent’ financial companies that lend money at astronomical interest, sometimes reaching several thousand per cent.
Some Spaniards complain that their country has been effectively hijacked by bankers and politicians, with the media playing down the scale of the crisis and covering up the disgraceful games that are played in the corridors of power. And it’s not just the party in power that is blamed for all the unsavoury mess. The socialists, who have just been turfed out of office, passed legislation which made the country uncompetitive. They were friends of the trade unions. Whatever they wanted they got. That ensured they would vote socialist at the next election. The conservatives (Partido Popular) are just as bad. The communists (now called the Union of the Left) engage in righteous indignation and blame everyone else. Needless to say, they have no solution except removing the present political arrangement and taking over themselves.
Spain is a classic case of a country which has ignored a basic truth: politics is about what is desirable but economics is about what can be done. Politics is often in the clouds but economics is a down to earth discipline. Time and again politicians are so vain that they think they can bend the laws of economics to suit their purposes. And some of them are actually trying to revive the loony ideas of Karl Marx, who had a twisted approach to economics. He thought for example that market economics can be simply banished and replaced by a command economy. The law of supply and demand, according to Karl, would cease to function under communism. Out would go the profit motive and everyone would be poor but happy as there would be no one to envy. Communist economics fell flat on its face in Europe between 1989 and 1991. Unfortunately it is being revived in the EU with its bizarre interventions and subsidies of the banking sector that long ago became not fit for purpose and practically stopped funding the real economy.
And now that the European economy is falling apart politicians and the money men are trying to save the rotten banking system and the euro that benefit no one apart from the bankers and the people on their payroll in government. If this continues the Great Crash will happen. And if history teaches us anything then it is that big wars result from big crashes.