12 Spanish Hypocrisies for 2012

Ignacio de la Torre. Professor. IE Business School

8 February 2012

Another new year, same old problems. A grand total of 12 major hypocrisies have managed to survive intact to see in 2012. Let’s see if we can whittle down the list to zero before this year is out.

Another new year, more of the same old problems. A grand total of 12 major hypocrisies have managed to survive intact to see in 2012. Although, fortunately, it would appear that one (see No. 5) is no longer quite as hypocritical as it was.
Let’s see if we can whittle down the list to zero before 2013.

First, we have the court case against Camps for allegedly receiving some free designer suits, when he should have been put on trial for leaving Valencia technically bankrupt. The latter is what society should be debating, not the former.

Second, the “c” for collective in SICAV, which are fiscally efficient investment tools used individually by the super rich. Hence the “c” is pure fallacy.
Third, the Spanish senate, which serves no practical purpose, but which continues to cost 65 million Euros a year (and has been going for more than 30), other than to provide politicians with extra cash. The fact that there is no suggestion that such a vacuous institution should be closed perfectly demonstrates the level of glibness.

Fourth, Spain’s state television channels, which continue to consume 2,000 million Euros of taxpayers’ money, and the debt that we will pass on to our children for the sole purpose of controlling news programs with ever dwindling audiences and credibility. The fact that Spain’s political parties have made cuts in the healthcare sector before they would even consider touching state TV is stark evidence of just how low the political species has sunk.
Fifth. Members of congress, who keep awarding themselves a private pension plan funded by our taxes, while assuring citizens that the country’s social security system is sustainable.

Sixth, the European financial system, which continues to claim it is solvent to avoid the dilution required to carry out the recapitalization that would be needed if they acknowledged the losses resulting from applying real value to their toxic assets. And this has been going for four years now. Meanwhile, banks say they have no money to lend, which translates into an unprecedented reduction in private credit, which is leading to a suffocating double dip recession.

Seventh. The Central European Bank, which insists it is the guardian of the monetary system while carrying out one of the largest expansions in its history, which will sooner or later cause inflation. So which is it?

Eighth, China, which maintains its exchange rates while forecasting the need to open up markets to its exports. The result is the accumulation of reserves in dollars, which will sooner or later cause what is likely to be the greatest fall in value in history of the dollar against the yuan.

Ninth, America’s fiscal policy, sequestered by the electoral calendar and the submissiveness of its political class. We all know that a family cannot receive 1,000 and spend 2,000, and this is just what the US is doing. Future generations will pay dearly for it much to the shame of the current generation.
Tenth, German politicians who reject eurobonds or quantitative support from the ECB without explaining to their electorate that the German banking system is one of the most fragile in Europe, and that if one piece falls the domino effect will kick in.

Eleventh, the Russian democracy (a bit of an oxymoron), incapable of cleaning up its act or of cleaning up an economy that is dependent on raw materials, a declining population and suicidal credit expansions.

Twelfth, the European democracy, that is losing its lifeblood in the form of birth rates that are near collective suicide, while we all shout about solidarity and the welfare state.

Happy new year all.


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