You forgot to mention that "this government" is also aligned with the "craziness" If not how do you justify the 20billion rescue on Bankia? That money at least doubles the amount "recovered" in the spending cuts. Although is true that they are introducing changes fast.
Bankia is the result of many "Cajas" creating a bank together. "Cajas" are non-profit financial institutions that have to use their benefits for social responsibility (http://en.wikipedia.org/wiki/Savings_bank_(Spain).
Admin council of "Cajas" are formed by people selected by political party in power in that region, thus "Cajas" are highly politized. Many "Cajas" had a lot of toxic assets, and were forced to unite and create Banks to be able to refinance themselves.
Bankia is the fusion of many "Cajas" controlled by the PP (Partido Popular - Popular Party, right-wing party) in an effort to create a "Bank of Popular Party", that is Bankia. The "Cajas" involved, being the most important Caja Madrid, had huge losses due to toxic assets. The fusion of all of them won't get anythyng but a even greater hole.
That hole of toxic assets is being nationalized and assumed by the state. Remember that Spain is now ruled by the PP. That allows effectively saving Bankia as a Bank of PP. But Bankia is NOT owned by the state, only 100% of BFA (the bad part of Bankia) is owned by the state, which in turn controls 45% of Bankia. That leaves 55% of Bankia, free of toxic assets and owned by private hands, but effectively controlled by the PP.
You are right that the PP is trying to fix their own mistakes. But the Spanish central bank has been instrumental in hiding ALL the spanish banks holes (or ignoring it or I don´t know what they have been doing).
There are no cajas without exposure to the crisis, all the local governments have used them as if they where their own bottom less booty that had to be shared out.
Maybe I wasn´t very explicit but in the second paragraph I say that it has been a general illness. All the spanish politicians have behaved equally, despite their party or region.
It has been a gold rush and nobody is free of guilt.
The only thing that I am stating is that finally the central government is taking action (late, maybe too late), the former one just sited on their asses doing nothing because after all they were going to lose anyway and why lose more votes and carry that bad karma when the next government cant take it all?(no great statemen lately around here :( ).
If they had won this elections for any reason, they surely would be doing something pretty similar (after all Merkel has been dictating the economic measures this last 6 months). We don´t have too much options left and even then is maybe too late. (I really hope not)
Well, I don't think the PP had much of a choice. And there wasn't really much the PSOE could do either. This is much bigger than either party, because its the sum of both parties' opulent building and pocket filling, from the local governments right up to the king's son in-law :)
And for the sake of being in the Euro the margin call has come, so to speak.
What I don't get, is why didn't they at least try to clean things up a little bit before all of this? I guess Aznar's idea was that the economy would pull thru all of the the corruption with the housing bubble. Kinda shortsighted.
I think whole Europe will pay because of being too late...
I live in Barcelona since 2009 and I couldn't believe the total lack of reaction of the current government at that time. I don't know if it was because they didn't know what to do (anything should have done better than nothing I think) or if they didn't want to pay the political cost of doing something "wrong", which, ironically, they have paid because of doing absolutely nothing at all!
I don´t think people realize how little the former government did, and now with their opposition strategy they are in fact gaining support little by little.
They only have to criticize the cuts and call them "right wing" and people will flock to them. We don´t want to hear bad news, and when you have had 3 years of them, some people is asking for somebody to sell them the snake oil that will bring everything back to 2005.
People have been getting mortgages way over what's reasonable.
Local banks have been getting credits to provide these mortgages they knew were unreasonable.
Foreign financial institutions have been lending money and allowing debt levels to rise uncontrollably.
Industries everywhere have benefited from all this available money to sell more product (esp. houses).
Politicians, companies and markets have emphasized and focused on short-term benefits over any kind of long-term strategy.
Everyone, everywhere has stood by and let this happen, because everyone assumed that everyone else knew what they were doing. Voices of concern were quickly silenced. Nobody wanted to be the party pooper, nobody has done anything to prevent this, nobody wants to bear the responsibility for what has happened, and nobody knows how to fix it.
