dagblog - Comments for "Bailout bill for Spanish lender Bankia continues to soar"

Spain Fails to Count Cost of

artappraiser — Tue, 29 May 2012 07:40:17 +0000

In reply to Bailout bill for Spanish lender Bankia continues to soar

Spain Fails to Count Cost of Zombie Developers' Loans: Mortgages
By Sharon Smyth and Neil Callanan, Bloomberg News, May 28, 2012

May 29 (Bloomberg) -- Spanish banks are masking their full exposure to soured property loans while they continue to prop up insolvent "zombie" developers, leading to credit-rating downgrades and plummeting share prices.

Spain is trying to clean up its banks, requiring lenders to set aside more for possible losses on loans deemed performing to developers like Metrovacesa SA, which hasn't completed a project in more than a year and has none under way. While that represents about 30 billion euros ($38 billion) of increased provisions, it's not enough because many of the loans said to be performing aren't, said Mikel Echavarren, chairman of Irea, a Madrid-based finance company specializing in real estate.

"Spain has engaged in a policy of delay and pray," Echavarren said in an interview. "The problem hasn't been quantified by anyone because there is huge pressure not to tell the truth."

The Economy Ministry says that Spanish banks have 184 billion euros of developers' loans and assets that are "problematic," while the remaining 123 billion euros are performing....

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/28/bloomberg_ar...

I'm not sure what Yglesias

Dan Kervick — Sat, 26 May 2012 03:57:26 +0000

In reply to Spain's Banks Are

I'm not sure what Yglesias has in mind in bringing in nationalization. The issue in Spain is that the liabilities of Spanish banks are for payments in a currency that the Spanish government doesn't control. Whether the banks are nationalized or private makes no difference to the crisis Spain is facing.

The question of whether to nationalize or not nationalize is about other factors: the utility or disutility of competition, profit motives, creative destruction etc. in the financial industry. It has little connection with the things happening now in Europe.

Spain's Banks Are

artappraiser — Sat, 26 May 2012 03:38:16 +0000

In reply to Bailout bill for Spanish lender Bankia continues to soar

Spain's Banks Are Collapsing
By Matthew Yglesias, Moneybox @ Slate, May 25, 2012

Here in the USA, voters may not like bailing out bankrupt banks but at least there's no chance of the United States government running out of dollars. The problem in Spain where Bankia keeps asking for billions of additional bailout euros and banks are getting downgraded left and right is that the state can suffer from an actual shortage of euros.

Something for folks who recall the bank nationalization debate of 2009 to note is that Bankia is the result of Spain nationalizing and merging a bunch of failed banks [....]