Spanish Banks Weakened by Real Estate: Only Part of the Story
The Wall Street Journal reports an a few Spanish banks reporting losses from bad real estate loans. Spain's real estate bubble has burst. Sound familiar? It's something like what happened here in the U.S. where loose money available for mortgages drove up the price of houses, followed by a collapse in value that's still going on after almost six years.
But the article masks the real problem in Spain and indeed most of Europe. The bad loans on the books of European banks - not just Spanish banks - will prove to be the lending they did to the European governments. Next week, we'll take a look at that.
As for this report about a few Spanish banks, it's mostly a distraction from what's really going on. And we'll see that what's really going on is quite incredible.
Meanwhile, we in the Northeast will be locked into summer humidity for the foreseeable future, which should somewhat curtail any ambitions I've had to ramp up my outdoor exercise (mostly jogging and running). Then again, the London Summer Olympics start today, which should provide ample excuse to stay in the air conditioned house to watch the athletes compete.
Yes, I see the contradiction of lessening my own exercise to watch athletes, mostly sitting on my you-know-what. But that's what we humans are about sometimes - a bunch of contradictions, right? How else could we read and listen to the reports from our leaders about how they will straighten things out and not either just tune them out or grab our pitchforks and march on Washington? It must be that a part of us - in spite of ourselves - somehow keeps believing that maybe this time they really mean to do the right thing - or even have any idea what the right thing to do is.
And we believe this in spite of all the evidence to the contrary. We see the contradictions and we somehow live with them.
But the article masks the real problem in Spain and indeed most of Europe. The bad loans on the books of European banks - not just Spanish banks - will prove to be the lending they did to the European governments. Next week, we'll take a look at that.
As for this report about a few Spanish banks, it's mostly a distraction from what's really going on. And we'll see that what's really going on is quite incredible.
Meanwhile, we in the Northeast will be locked into summer humidity for the foreseeable future, which should somewhat curtail any ambitions I've had to ramp up my outdoor exercise (mostly jogging and running). Then again, the London Summer Olympics start today, which should provide ample excuse to stay in the air conditioned house to watch the athletes compete.
Yes, I see the contradiction of lessening my own exercise to watch athletes, mostly sitting on my you-know-what. But that's what we humans are about sometimes - a bunch of contradictions, right? How else could we read and listen to the reports from our leaders about how they will straighten things out and not either just tune them out or grab our pitchforks and march on Washington? It must be that a part of us - in spite of ourselves - somehow keeps believing that maybe this time they really mean to do the right thing - or even have any idea what the right thing to do is.
And we believe this in spite of all the evidence to the contrary. We see the contradictions and we somehow live with them.
Comments