Monday, September 3, 2012
Spanish government willing to give up sovereignty to protect banker bonuses
As reported by Newsday, Spain's foreign minister says the Spanish government is willing to give up sovereignty to draw a line under the eurozone's financial crisis.
A tradeoff that your humble blogger suspects nobody else in Spain outside of the government would be willing to make.
What makes the suggestion of this tradeoff preposterous is that even if the Spanish government relinquished total sovereignty to the banks, it would not end the Spanish or eurozone's financial crisis.
Simple math shows that there is far more in outstanding debt than the borrowers can afford to repay and far less in collateral value than the amount of outstanding debt.
If the Spanish government is so desperate to give up its sovereignty, may I suggest they ask Iceland's leaders to govern Spain. Having shown in Iceland that the solution to too much debt is to adopt the Swedish model and force the banks to absorb the losses, I bet they would be happy to do the same for Spain.
The result in Iceland is the financial crisis is behind it, the country's debt is investment grade and their economy is growing with unemployment declining.
Instead, the Spanish government appears set to relinquish sovereignty to the bankers or at least the German government. While that is undeniably good for preserving sizable bankers' bonuses, I am not sure what positive there is for the Spanish citizenry.