Tag Archives: finance

Fighting an economic cold

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Many of the pundits and newsreaders who refer to the current economic malaise threatening Europe use one term more than any other: contagion.

The suggestion is that the troubles that have afflicted Greece and now Ireland are a sort of water-borne disease, transmitted through the sewage-laden streams of international finance. And all we want to know is: how do we protect ourselves against this nasty infection? How do we beat the contagion?

The problem is that the crisis affecting Europe isn’t bacterial or viral at all. As Portugal, then Spain, Italy and France stand like dominoes waiting to be toppled, economic ministers (who often know nothing of economics) flail around looking for a vaccine. They don’t seem to realise that the contagion isn’t contagious at all. It’s a cancer.

The cancer of neoliberal capitalism has metastacised in multiple countries. It sucks the marrow from the bone and leeches the oxygen from the blood. The only way to get rid of it is surgically. By removing the financial sector from the centre of our national economies, we free ourselves from the carcinogenic effects of its vapours. We might be weakened after the operation but we’ll come back stronger.

If there is a spectre haunting Europe at the end of this miserable decade, it is the spectre of neoliberalism. And socialism is the doctor we need. Or the ghostbuster, or something.

Are Spanish banks in trouble?

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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?