Meanwhile, The Spanish Lies Are Being Exposed

Spanish Lies

As our futures bleed this morning on the hangover from yesterday’s rumor dujour on the “fiscal cliff” buried below the fold and therefore invisible to Americanus Stupidus is the news that both Bankia and Valencia, along with a handful of other Spanish banking names, are collapsing.

Bankia was formed from a merger of provincial savings banks, drawing in over a quarter of a million small investors with extremely aggressive marketing.  Unfortunately it appears that they were also hiding losses and it was recently revealed that the firm had negative equity (that is, its assets are worth less than its deposits.)

Last May, if you recall, the firm was “nationalized” but the patina of normalcy was maintained for a while, with some fools continuing to believe they would somehow maintain their investment.  That now looks to be a farce as the recapitalization of the bank will effectively destroy the value of the firm’s stock and leave investors with what amounts to nothing.

This leads one to wonder if the original listing on the Madrid exchange was basically a sham operation; it’s not exactly as if the firm made all these loans in the 18 months since it was listed in July of 2011!

But heh, remember that we’re all being told that the global economy will be ok, we’ve just got to get through this fiscal cliff problem and then Europe and the United States will return to strong growth!


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