The Triumph Of The Irrelevant

A certain notable amount of ink has been spilled this week concerning the possibility that Spanish banks, having apparently sidestepped a liquidity crisis, might be now entering one of actual solvency, as the now famous counter-cyclical generic provisions meet up with ballooning loan default rates. Thought to be be less probably the case by El País than by Cotizalia, we (despite the vacuum that develops in our solar plexus every time we look at a bank's stock chart) do not feel either competent or sufficiently informed to comment. On the other hand, this writer cannot help but notice the agility with which minister of industry, Miguel Sebastián, has made political use of the country's banking woes to steal the protagonist's role in the crisis from economy minister, Pedro Solbes.

Despite less than complete rhetorical support from the prime minister and outright hostility from the governor of the Banco de España, Sr. Sebastián has insisted on the populist tack of accusing the financial institutions of impeding the progress and well-being of the nation by refusing to lend money to citizens and small business in their time of need. The very strong indications that he had no clue when he assumed his current post a 10 months ago are now being confirmed. The difference is that then he had no influence whatsoever and, now, one cannot turn on the news without finding his mug plastered all over the screen.

Last April, attempting to kill not two, but three birds with one stone, Sebastián had the temerity to suggest that Spain would fight its way out of this mild economic malaise, diminish its dependence on overpriced petroleum and transform its economy (not to mention save the planet) through government energy conservation grants. Specifically, these were to be directed towards the heat insulation of the country's stock of buildings (read - Ontario, 1980) with the added bonus of mailing to each and every Spanish household, free of charge, two low consumption light bulbs. Thus is one led out from the Valley of Death.

Of course, expectations concerning his fitness for the job were not all that high to begin with - having achieved his ministerial status as a reward for volunteering for the suicide mission of being PSOE mayoral candidate in the most recent Madrid municipal elections. His other appropriate life skills mostly centre on being able (accompanied, and probably overshadowed, by his brother) to handily maneuvre himself along that seamless continuum which stretches from academia to actual electoral politics, passing through stages such as advisor, lobbyist, hack and bagman in the process. But back to the banks and cajas.

Cueing his demagoguery on the finely-tuned (as we mentioned last week) 'profitability' of the banking sector, he is threatening the industry with legislation if they do not open the credit taps and start lending to the living dead left ambling aimlessly about the half finished streets. Given that he must know (being an economist) that the fastest route to ruin for a bookie is to extend ever more credit to a punter that's lost his mojo - especially at a time when mojo itself is at a premium, we can only wonder exactly what political goals are actually motivating Sebastián's rantings. But didn't Zapatero say that he wasn't going to repeat?

Given the general paucity of coherent ideas as to what is actually to be done here (other than dish out a few billion to Spanish municipalities so as to provide a couple of months respite to some of the unemployed), one would think that the opposition PP would be basking in glory. But no. Recent polls show them further away from the PSOE in terms of public esteem than during the last election. Then again, they have bigger fish than mere popularity, or even nation-saving, to fry. Unable to decide if they are representatives of Ayatollah Rouco Varela or actual willing participants in a modern democracy, the PP has been reduced to infighting focussed on the repugnant trench warfare politics of Comunidad (not city) de Madrid president (and pretendress to the PP crown), Esperanza Aguirre. Those wishing to keep up-to-date on this ongoing melodrama could do much worse than read what Graeme, last surviving member of the Internationals, has to say. His blog is entitled South of Watford.

The photo at the top shows Ms. Aguirre accompanied, on the left, by another PP'er that doesn't get how the game works, Ángel Acebes. Sulking on the right is her arch-enemy, PP City of Madrid mayor Alberto Ruíz Gallardón. Now he would be an interesting option at the head of the national list in three years time.

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