Monday, April 6, 2009

Spain and Madoff

I was listening to Peter Day's World of Business podcast yesterday, in which he explores the effect of the recession on some of the countries of Europe that had less historically developed economies, including Spain. He was interviewing a broker, now unemployed, who had been selling investments in the Bernie Madoff ponzi scheme. He was saying that it was impossible for him to find a new job at the moment. They also discussed the likelihood of Spain's unemployment reaching 15% of the workforce, which is a staggering figure.
I don't know if it is that they didn't believe it could happen, or simply deluded machismo on behalf of the Spanish banks and Government. Either way, they didn't see the property crash coming, ignoring the fact that bubbles always burst, and they denied that there was any exposure to the sub-prime markets and scandals affecting other countries. We have just seen the first rescue of a Spanish bank, and it surely must be the first of many. I have been saying for years that there were too many banks and far too many branches, kitted out like little offices with a manager and a handful of staff that sat around pretending to work all day. Still the managers that I deal with deny that there are any problems with their own banks...........

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