I’ll be honest: except for Marxist theories about capital and exploitation, I generally eschew any discussion that covers banking and that huge, murky industry known as ‘finance’. This is a weakness on my part, I’m sure: a true socialist should be well versed in the movements of capital and cash. And much as I hold the FT to have some of the best reporting about Spain that you’ll find in the British press, I find it difficult to understand what its market journalists are writing about.
So it was with some dread and awe that I read this blog post concerning the state of Spain’s two largest banks, Santander and BBVA.
Apparently, it’s pretty obvious that these two large banks are hiding massive liabilities which, if suddenly exposed, could cause the Spanish economy to collapse. Ignore the bullshit on that blog about ‘racial pressures’ and you still have a coherent case that decries the secrecy behind the apparent miracle of Spain’s two massive banking success stories. And it makes sense: how could it be that these banks could be 100% safe when their American and British counterparts have received billions of Euros in bailouts?
I therefore invite finance-minded readers of this blog to tell me just how precarious our situation here really is. Are we fucked? And if so, to what degree?
I dunno, Tom. The writer of that piece presented four options ranging from hunky-dory to apocalypse, then clearly chose number two – they’re fudging their numbers a bit, but there’s no indication they’re insolvent.
Read it again.
It’s actually quite difficult to ignore the ‘racial pressure’ element in that post; it is interlaced throughout the opening apocalypse-ramping argument. And what a classic case of ramping it is. Introduce two end-member possibilities (a and c), focus on one (c) and then shift your scope to make it appear the middle ground. Follow up with a hitherto unannounced extreme (d) which now appears more reasonable as being only one step away from the object of your focus (c). Then limply suggest that the original middle option is your position, leaving the strong hint that you are perhaps committing the error of wishful thinking.
I’m not saying the blogger is being consciously deceptive, but this is a classic case of ramping. It also doesn’t make him wrong; whilst I am aware of the problems of the structure of this argument I have no position on its substance. An (unintentionally) bad argument can sometimes contain not a word of a lie. It’s just that they are often the product of an attempt to make a mountain out of a molehill, or to smuggle in a very unlikely scenario into a realm of reasonableness to which it may not belong.