Spain's youth asks: Why is there money for banks and not for us?
By Julio Embid, Special to CNN June 5, 2012
By Julio Embid, Special to CNN June 5, 2012
CNN) -- How big is the financial hole? This is the main question among
Spaniards nowadays. They want to know how much money Bankia, the country's
fourth-largest bank, needs.
Bankia was created in 2010, a result of the
merger of seven small entities including Caja Madrid
Such cajas -- regional savings banks with
board members appointed by the local authorities -- devoted part of their
profits to social purposes within their areas. They fell into enormous debt due
to their investments in infrastructure, and thousands of houses which were
never sold.
Bankia was a proposal of the ruling
Popular Party (PP, conservatives). The idea was to merge the saving banks and
give an executive role to Rodrigo Rato, the former managing director of the
International Monetary Fund and first chairman of Bankia.
Before these posts, Rato was Minister of
the Economy and Treasury in the first and second cabinet of Prime Minister Jose
Maria Aznar, who led the country between 1996 and 2004.
Rato was idolized in the conservative
media, and credited with the previous cycle of economic growth. All was running
smoothly until May, when the current Minister of Economy, Luis de Guindos,
forced Rato to resign as Bankia president while the CNMV (the Spanish agency
for financial markets) suspended the stock exchange of Bankia when its price
slumped to half its original value.
Now, as Bankia sucks up financial aid,
Spaniards wait to hear news of cuts to their welfare state.
Every Friday could be a Black Friday,
because it's always Friday in Spain
The government recently approved a €10
billion euro ($12 billion) cut
in education and health
programs, and will most likely announce it will spend €23 billion ($28 billion)
to rescue Bankia.
So what do the people think?
According to the CIS, the public agency
for surveys, Prime Minister Mariano Rajoy has gone from a rate of approval of
45% in January to 38% in May -- a significant drop considering he won the
elections with an absolute majority only six months ago.
People, especially youth (for whom
unemployment rates are above 51%), find it difficult to understand there is no
money for healthcare or universities, but enough to go around when it comes to rescue
banks or pay severance packages to
bankers who have ruined their companies.
Up to now, no one has resigned empty
handed.
But not everything is bad news for the government
and its party. Their main competitor, the Socialist Party (PSOE, center-left),
trails in the polls.
Although it has won two regional elections
this Spring (Andalusia and Asturias), its leader Alfredo P. Rubalcaba generated
"little" or "no" confidence among 78.8% of the Spaniards,
according to the latest survey carried out by the CIS.
So what happens now? All the parties in
opposition have asked the government to open an inquiry into the Bankia case. It
is difficult to justify the billions in cost without knowing exactly what
happened.
Meanwhile, summer is on the way. In Spain
Demonstrations, strikes and protests will
probably be forgotten until September.
While transport prices and university fees
rise, and the government increases taxes and lowers pensions, people prefer to
stay at home and support La Roja
(Spanish national soccer team) and wait until it is cooler to take the streets.
