tag:blogger.com,1999:blog-7336648542166394110.post7357619752541697633..comments2023-06-05T08:10:46.298-07:00Comments on Edward.Hugh.Blog: Has Spain Contracted The Artemio Cruz Syndrome?Unknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-7336648542166394110.post-52447679595708493532008-08-07T01:47:00.000-07:002008-08-07T01:47:00.000-07:00Excellent article! Thanks for sticking to economic...Excellent article! Thanks for sticking to economic issues and not entering any political bias.<BR/><BR/>The problem in Spain is that nobody can have an economic debate without entering into senseless political issues.Monhttps://www.blogger.com/profile/12674120496729903069noreply@blogger.comtag:blogger.com,1999:blog-7336648542166394110.post-617146324321661982008-06-28T04:52:00.000-07:002008-06-28T04:52:00.000-07:00I already knew your Spain Economy Watch blog (I´ve...I already knew your Spain Economy Watch blog (I´ve also seen it in the RGE Monitor).<BR/>Sure I´ll follow you.<BR/>I´m sorry to say I neither have any direct link to information about the ECB auctions.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7336648542166394110.post-89958293184386117802008-06-28T01:27:00.000-07:002008-06-28T01:27:00.000-07:00Excellent analysis Edward. You go however only to ...Excellent analysis Edward. You go however only to the economic aspects of the problem, but the ultimate reason is political. Central Governments in Spain depend on Autonomous governments that demand more and more finance, leaving local corporations without sources of finance. The only source to finance their local corporations is to keep fueling the construction industry transforming more agricultural land for housing use and booking in the process hefty fees. Construction Industry and Banks made a lot of money thanks to huge demand fueled by negative interest rates. However corruption picked, and millions of families are now financially trapped. <BR/><BR/>In my opinion, power and financial resources need to move from Autonomous Governments to Local Corporations. I am afraid that this crisis is going to hit us hard enough for our polititians to realise that.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7336648542166394110.post-20943422604641998092008-06-24T13:17:00.000-07:002008-06-24T13:17:00.000-07:00One other question. Can you point me to the link o...One other question. Can you point me to the link on the BDE where they publish the data on the weekly auctions funding, I am getting the data from secondary sources at the moment, and I would prefer to go straight to the horses mouth so to speak.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-7336648542166394110.post-91663871803248474882008-06-24T13:06:00.000-07:002008-06-24T13:06:00.000-07:00Hello josé luis,"Might be some kind of explicit or...Hello josé luis,<BR/><BR/>"Might be some kind of explicit or implicit limitation from the ECB authorities, perhaps the rule is not to go much beyond the key suscription of the BDE on the ECB capital"<BR/><BR/>Yes, I agree very much here. Probably an implict (self-regulation) limit, in the sense that any sustained increase on the part of the any one of the big four for any length of time would be very politically sensitive, plus it might give the impression the Spanish banking system had problems, and they certainly wouldn't want to do that. <BR/><BR/>Thanks very much for the links. You could really help me with this sort of thing if you have the time or the inclination, by chipping in comments on my Spain Economy Watch blog (see right sidebar). Obviously if you are into reading the speeches of the governor of the Bank of Spain you are thinking about all this at a fairly serious level.<BR/><BR/>Going back to the main point here, while they are restricting their purchases they are pretty short on liquidity, some evidence of this being the decision not to accept Italian bonds by the Spanish Treasury (see the Spain blog). I mean this is so they can give the money to the Spanish banks, and avoid attracting the other piece of paper no one wants.<BR/><BR/>Also what is happening to all the rest of that ECB money? What are people like Deutsche Bank and ING Direct up to? They are offering mortgages with wafer thin margins, so where is the money coming from. They wouldn't be depositing ABS's with the ECB from their home countries and then chanelling the money into Spain to get market share would they?<BR/><BR/>Naughty boys.<BR/><BR/>This is what moral hazard is all about. If some of the debts attached to the Spanish cedulas are going to be written off over at the ECB, well then, obviously, it makes sense for everyone to get a piece of the action. I mean, who would want to miss out on an offer like that. Even if the property you lend on in March 20o8 drops 50% in value, the bond you used to get hold of the money to lend will probably get written down by the same amount, so where's the risk?<BR/><BR/>You don't make much, but again you don't lose much, but meantime you get a customer base.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-7336648542166394110.post-70824797977022849202008-06-24T10:34:00.000-07:002008-06-24T10:34:00.000-07:00Very good analisis! I encourage you to keep this p...Very good analisis! I encourage you to keep this path, because it is really difficult to read about the real economic problems of Spain.<BR/>Just a suggestion about spanish banks low (although increasing)share on the ECB's weekly funding auctions (10%). Might be some kind of explicit or implicit limitation from the ECB authorities, perhaps the rule is not to go much beyond the key suscription of the BDE on the ECB capital (it is 7,55%, see www.ecb.int/press/pr/date/2007/html/pr070102_2.es.html).<BR/>For example, the BDE governor, Miguel A. Fernandez Ordoñez, stated on june 24 that spanish banks have increased their participation in eurosystem fundings, "without going far beyond the equivalent participation in the key of Bank of Spain in BCE´s capital" (I´ve translated last paragrahp, page nine of the speech available in www.bde.es/prensa/intervenpub/gobernador/mfo240608.pdf).Anonymousnoreply@blogger.com