Tuesday, August 28, 2012
Here's a great article on the current situation of Spain on ZeroHedge. What it emphasises is the relative difference of Spain,, especially that they evolved for themselves a special kind of finance model called 'dynamic provisioning' which basically allows them to fix the asset values of banks until favourable. This means that, according to ZeroHedge, the banks in Spain have their solvency underwritten by assets which are 40% overvalued. Perhaps a better word for the system could be 'static provisioning', maybe 'price fixing' or simply just 'fraud'.
Anyhow, with my Spanish and a little free time, I watched Mariano Rajoy and Herman Van Rompuoy face the press today. Once upon a time I had hopes that Rajoy, unencumbered by the burden of responsibility which was Zapatero's, would be able to take a fresh approach. Uh oh. Rajoy's a gung-ho Charge of the Light Brigade type. He ranted in practically every single answer, despite the questions being far from challenging. No-one wanted to ask something simple like 'how much unemployment is unbearable for a country?' No, they knew that practically the only thing Rajoy would say is 'the Euro is forever''. Much like love. And we know how that usually turns out. The more you have to say it, the less it means and the more it signifies.
Posted by ed thomas at 3:15 PM