tag:blogger.com,1999:blog-25064447.post8607363206124294665..comments2013-09-12T06:30:06.298+02:00Comments on Spain Economy Watch: Santander's Banif Fund Suspends PaymentsUnknownnoreply@blogger.comBlogger10125tag:blogger.com,1999:blog-25064447.post-30860400936987682142009-02-18T00:13:00.000+01:002009-02-18T00:13:00.000+01:00This is my very last comment and then I will, hone...This is my very last comment and then I will, honestly, follow the advice of Jacques Chirac and keep my mouth shut.<BR/><BR/>What will you do if the Germans get tired of paying for others and simply say: "Pay for your mess yourself" ?<BR/><BR/>The answer is plain and simple: you will have to do as I say. <BR/><BR/>Time will tell.<BR/><BR/>Best regards and best wishes<BR/><BR/>Hynek Filip, Prague, Czech RepublicAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-25064447.post-5452205036391150062009-02-18T00:05:00.000+01:002009-02-18T00:05:00.000+01:00Hi again,"I would be very very careful about point...Hi again,<BR/><BR/>"I would be very very careful about pointing the finger in their direction."<BR/><BR/>I'm not pointing any finger. I'm just pointing out that they are in serious economic trouble. As serios as in Spain, but different. When the others (UK, US, Spain, Ireland) were hard at work running up debts and deficits, Japan and Germany we running up huge surpluses, which were then recycled and lent to those who were buying their products. Thus their banks are among the first affected by the meltdown in the economies they leant money to.<BR/><BR/>Austria is the same case, only Austria was financing all the deficits in the East. This is why Austria's future is now enormously at risk, and they may be more receptive than people in Spain to your proposed experiment.<BR/><BR/>Basically Japan and Germany have quite simply let their populations get too old, and the future for them must look very uncertain and insecure, unless that is they like this very painful boom bust experience every five years or so.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-84709425182255115862009-02-17T23:58:00.001+01:002009-02-17T23:58:00.001+01:00Just one more comment re Germany: I would be very ...Just one more comment re Germany: I would be very very careful about pointing the finger in their direction. Since 1989, they managed to pay for the re-unification, and they also managed to buy and rebuild most of the industrial base of all the backwater countries between Berlin and Moscow. They still have a lot left in them, no doubt about that.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-25064447.post-67216497849219190652009-02-17T23:58:00.000+01:002009-02-17T23:58:00.000+01:00Hi again,"Edward, there is no role model. All of u...Hi again,<BR/><BR/>"Edward, there is no role model. All of us to the west of Kiev are collectively guilty as charged, and we all need to reform."<BR/><BR/>Well look. All I can say is that I wish you well over there in the Czech Republic with this pioneering model to show the rest the way. I don't think I'm exaggerating if I say that in this sense, the cultural, one, Spain is a pretty conervative country.<BR/><BR/>I don't think - and especially after what people are having to put up with as a result of the introduction of the Euro - that people are in the mood for too many more experiments.<BR/><BR/>I think there is such a thing as second mover advantage here. When someone has another tried and tested method available somewhere, then I am willing to give it serious consideration, but in the meantime I prefer to stick with the tried and tested, so you will forgive me if I go ahead with my EU bonds and Obama, and try to encourage Spain to work with the US and Germany, and see if we can't tunnel our way out of this "hell hole" together.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-8488728921412908882009-02-17T23:39:00.000+01:002009-02-17T23:39:00.000+01:00Edward, there is no role model. All of us to the w...Edward, there is no role model. All of us to the west of Kiev are collectively guilty as charged, and we all need to reform. We borrowed too much, and we ate too much. Now we must pay and there is no way whatsoever to get out of the hole by borrowing more. It is as simple as that.<BR/><BR/>I do realise that it will be extremely hard for the psyche of most of us (myself included) to lose thousands and thousands an tens of thousands of euros and find bottom at, say, one third of our current net worth. <BR/><BR/>But, at the end of the day, does it really matter if you are worth a million dollars, or mere three hundred thousand? There is no difference. You will still be able to drive a car (well, it will not be a six litre, 350hp Chrysler beast, but a used Skoda Octavia), and you will be able to enjoy your coffee in peace. My sons will not go to Harvard Law School, but to Brno Technology Institute (and they may be better off for that). <BR/><BR/>So instead of issuing truckloads of EU bonds which may turn as worthless as the Irish will so very soon, let us do the obvious. Cut the red tape, forget global warming, political correctness and similar pastimes of the super rich. Fire half the bureaucrats and keep the rest at half pay. Let the walking dead corporations die. Bite the bullet and forget half of our bank deposits. Liquidate the welfare state and tell everyone that there is only one thing in store for the foreseeable future: hard work. <BR/><BR/>As long as this is not the way out preferred by European politicians, I am not selling my garden. I am actually pretty good at growing potatoes and maybe I will be able to barter them for a rabbit or two. To eat on Sundays, you know.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-25064447.post-75030040583328244922009-02-17T17:24:00.000+01:002009-02-17T17:24:00.000+01:00Hi José Luis,"I agree with Hynek Filip in say...Hi José Luis,<BR/><BR/>"I agree with Hynek Filip in saying NO to european bonds."<BR/><BR/>Well look, I don't think EU Bonds and wage and price deflation are two alternatives, we need both. The point is that with the deflation the defaults will skyrocket. Remember we are probably talking about 7 million plus unemployed in two years time, many of them with any form of financial support as the INEM money runs out. <BR/><BR/>And as the defaults rocket, and the NPLs lock in, Spain's banking system will simply melt. <BR/><BR/>So then these 100,000 euro guarantees will be worthless, and people will lose their deposits. That is what worries me most. <BR/><BR/>So Spain needs to retain some sort of working bank system. But, as I keep saying here, Spain may not be the worst case scenario, Germany or the UK may be. Remember Spain is going to default on external finance, much of it owed to Germany. And the meltdown in the East is sending german industry through the floor.<BR/><BR/>I have both Spain & Germany pencilled in for a 5% GDP contraction this year, and it will be neck and neck to see who is in a worse state. Events are overtaking ideas fast.<BR/><BR/>"If you issue european bonds, the play can go on, and the final recession will be worst."<BR/><BR/>No. I think there is no way the play can go on. This is finished, whatever happens. We are in a depression of global dimensions. This is going to last some years. Spain's political class losing control of decision taking about Spain's economy is a quid pro quo for the EU bonds. It is like an IMF bailout from Brussels, which to me personally makes much more sense than going to Washington.<BR/><BR/>Of course, if it is the case that at the end of the day the EU just isn't up to it, then it is leave the Eurozone and go cap in hand to washington, but I hope we don't reach that point, I honestly do.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-44427224541957864562009-02-17T16:14:00.000+01:002009-02-17T16:14:00.000+01:00I agree with Hynek Filip in saying NO to european ...I agree with Hynek Filip in saying NO to european bonds. As Willem Buiter has explained in the FT, what EU countries need is market discipline. I´m spanish, and I think it was good for Spain that S&P donwngraded spanish debt, because there is only one way politicians will try the extraordinary measures we need: market discipline. Zapatero will boast public indebtness untill the markets says no.<BR/>If you issue european bonds, the play can go on, and the final recession will be worst.<BR/>We don´t need euro bonds. What we need is a competitive disinflation: cutting wages and prices, as you Edward are pointing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-25064447.post-61804079012654503412009-02-17T16:03:00.000+01:002009-02-17T16:03:00.000+01:00"is it not so that an economy based on such foolis..."is it not so that an economy based on such foolishness and make-believe simply can not be saved, but instead must be radically reformed?"<BR/><BR/>Well, with all respect Hynek, I am publicly committed to reform (remember the post about Miguel Fernandez Ordoñez, etc, etc), and to the downsizing by 50% of the construction and property companies, and of a 20% general reduction in prices and wages, and of a state of seige building on emergency export industries (possibly with the necessary waivers from Brussels on regulations given the urgent problem)...<BR/><BR/>but do we really have to go all the way down to absolute zero first? I am against all types of fundamentalism, both of communist totalitarianism and of the free markets do everything mirror image.<BR/><BR/>I am not in favour of a 50% downsizing of all Spanish bank deposits, which is what we'll get if we are forced out of the eurozone, which is what we'll get if someone doesn't do something to stop it, and sharpish....<BR/><BR/>"Anybody following the Zimbabwe story? It is all there."<BR/><BR/>The big difference is Zimbabwe median age 20.1, Spain median age 40. There is no comparison. But then, you are working on a different theoretical model than me, that is why we are getting such different results. Basically, unless spain is rocketed out of the eurozone there is no way the country's leaders can credibly commit to inflation, no way at all. That past is all behind us. Look at Japan.<BR/><BR/><BR/>And, of course, the biggest problem that is on the point of hitting and about to make all this very complicated is coming from the East.<BR/><BR/>And also remember that I am not simply selfishly talking about protecting the UK, Ireland, Austria, Sweden, Germany and the South of Europe, I am also in favour of immediate admission and protection for all the eastern economies who want to enter the eurozone.<BR/><BR/>United we stand, divided we go down the plughole, one by one.<BR/><BR/>Incidentally, which reforms should we be copying? Can you give me an example of a role model country at this moment? Or is it that we have all been bad boys, and need to reform? This sounds rather utopian to me.<BR/><BR/>Bloomberg Today:<BR/><BR/><I>Moody’s Investors Service said some of Europe’s largest banks may be downgraded because of loans to eastern Europe, sending UniCredit SpA to its lowest in 12 years. Moody’s sees “continuous downward rating pressure” in the region as a result of worsening asset quality and western banks’ reliance on short-term funding, the ratings company said in a report published today. UniCredit earned almost half its pretax profit from eastern Europe, Raiffeisen International Bank-Holding AG almost 80 percent in 2007 and Erste Group Bank AG of Austria more than 60 percent, Moody’s said. The MSCI East Europe Financials Index dropped 9.9 percent to the lowest in almost six years after the Moody’s statement today. The International Monetary Fund has offered aid worth about $52 billion to Latvia, Hungary, Serbia and Ukraine. It may extend bailouts to Bulgaria, Romania, Lithuania and Estonia, according to Capital Economics research.</I>Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-86701799958631652162009-02-17T15:39:00.000+01:002009-02-17T15:39:00.000+01:00So basically it is all about virtual cash vanishin...So basically it is all about virtual cash vanishing into thin air and alleged "liquid" investments (Banif shares) becoming as illiquid as can be. <BR/><BR/>Has it not been manifestly foolish to think that such investments are truly liquid, given the nature of the funds investments (real estate)? Oh it was, but everÿbody believed that real estate knows only the way up. Which, in fact, is exactly the same as believing in Bernie Madoff.<BR/><BR/>So with all due respect to the argument that we need to put out the fire with whatever we have, is it not so that an economy based on such foolishness and make-believe simply can not be saved, but instead must be radically reformed?<BR/><BR/>If you issue gazillions of EU bonds without thinking about how to reform the economy and eliminate such blatant errors, you will most likely end up with the need to issue more gazillions of EU bonds just some three months later.<BR/><BR/>Anybody following the Zimbabwe story? It is all there.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-25064447.post-45651740529561318882009-02-17T15:00:00.000+01:002009-02-17T15:00:00.000+01:00eduardo, da gusto leerte para levantar el ánimo.eduardo, da gusto leerte para levantar el ánimo.Anonymousnoreply@blogger.com