In the normal financial system, which constitute the banks, all institutions have owners that are represented by the respective boards of directors. These tips caregivers, for their own benefit, not to extend credit to insolvent companies or who is supposed to taxation systems and detects when there are problems, provisions such loans, and proceeded to execute warrants that are taken, if that exist. But bankers can not do what they want with the claim that handle as the bank is not theirs. Are accountable to shareholders, depositors before (because misuse of credit can break the institution and we all lose their money) and before the public finances if, for example, is regarded as an expense credit granted in the knowledge that it would not be returned.
That was the case of Mario Conde who was sentenced to six years in prison for paying 600 million pesetas for a company, without any endorsement Argentia Trust (which later were shown to that company then distributed the money among various Spanish political influence to in governmental decisions in favor of the interests of Mario Conde was not the reason for his detention but he who gave that money without guarantees of payment). I know that in recent times and in some countries, the bankers have ignored these rules and to cap it had not been punished but for the moment in Spain are not in that situation and all banks are reporting profits.
Unfortunately, the savings in the hands of local politicians, it can grant credit without running and without provisions for guarantees, especially political parties, or can not?, Or may not be? If it does occur fairly often ... And now it is intended that these boxes are made even stronger by joining them. No doubt it is a good solution for their survival (in exchange for thousands of layoffs, yes) but also magnify the problem of these entities whose management is so unclear.
The boxes have lost their land, they open branches across the country and even have the largest investments abroad. There is a market Murcia, La Rioja, or Basque, a European level in that category regionalist no sense. It could be said of its social function but that is a vague concept whose spending is little quantifiable and that could be replaced by an increase in tax relief to certain tasks of banking as the sponsorship of culture. If we convert the biggest move in two things: whether it is within the same community, its economic importance is so great that the economic power and political autonomy is even more confused if they join together and boxes of different communities, how to ensure balance, how to unify criteria if the political influence of each autonomous community is different, and yet it remains how to ensure that CajaMadrid-for example, is just in its social spending with Murcia event of a merger with the Fund of Murcia? I think the management problems worsen.
If those savings were privatized (Mapfre was converted from a mutual to a trading company, would not be something so complicated) the resources obtained by the bids of the 46 savings banks would provide a major source of liquidity for municipalities and autonomous regions ( the eminent professor and curious political character since he was a candidate for mayor of Madrid by the PCE of which was an important post for less than 30 years and now coquetea with the PP, Ramon Tamames, and a half years ago estimated the value of the boxes at about 200 billion euros) since its deposits exceed those of banking in Spain. Perhaps not the best time right now but if his days in the state dispensed with Telefonica, Repsol, Argentaria and so on. Why not do it with the boxes as soon as possible and to gradually instead of increasing their power in every autonomy?
Because they give the customer the same treatment and the same services that gives a bank, why are not banks? Quoting Professor Tamames quote: "the alleged problem of the identity of savings does not exist: are banks, but they still do not know."
And it's obviously sad-partisan character in the management of nearly all the savings. The General Assembly of a box is a pantomime, is the Council that decides what new directors are even appointed as a closed list submitted to the assembly and of course the director general must be to the liking of the president of the Autonomous Communities in turn, leading to the financial fate of many funds have a political character.
Thus, not only would the privatization of savings banks a good economic measure but a breath of freshness in our young democracy. In other articles we could discuss further the money it loses all of TVE or commissions charged by politicians of all colors of the companies that are struggling to be awarded any work that we pay all or we pursue the tax by 4 euros and allow the tax where the biggest and most corrupt fortunes. It is curious that sometimes the best economic solutions are also the most fair ...
Written by Droblo on December 3, 2008 with 284 comments
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Personal comment.
On Friday the markets seemed to launch a feeling of strength: General Motors touched historic lows and reported that without government help would go into bankruptcy and unemployment in the U.S. grew in two months in more than half a million people and yet the stock market rose. However, if one takes into account that since 1896 he had never lost the Dow Jones in the three days of a presidential election, which the lower SP on Wednesday and Thursday together is the biggest in two days since 1987 and that the rebound technician, was lowered after so much with little volume, and could give an explanation and feared it was an exception to the trend weekly. The large package of measures the Chinese government at the weekend ($ 600 billion is the fifth of GDP, "it will be another and a few cartridges) extended this positive feeling in Asia and Europe on Monday morning With the exception of Ibex. There are over the joys until the afternoon of Thursday in USA.
The bank Santander on Oct. 28, at the mouth of its CEO Alfredo Saez, refused to need more capital. On November 10 announced an expansion. In these few days has been convinced of the impossibility of selling the Bank of Venezuela, the assets in ABN shares, Cepsa, which manages the funds and insurance, at the price demanded. In short, you have bought unsold before and now has been found with a liquidity problem ... (safe somewhere caught in a mortgage-bridge that sounds something) and the expansion is costing him all shareholders in market capitalization million euros. And serve to illustrate what is happening with the economy and that makes this crisis unique: no matter how much lower interest rates, including the Euribor, if that cheaper finance is not paid and if there is interest in using this possible liquidity to invest. Until Santander wants to sell assets and unable to do so raises the liquidity of its shareholders or tries to tap new. Santander can do that but, how many companies can do the same, how much they will get lower financing rates?
I attached two charts USA, with shaded on the cycles of recession, one is the unemployment rate in the U.S. and its forecast to reach 8%
This is another of the ISM manufacturing index:
In Spain the situation is similar, we have known in the past economic data and much worse if we do if the figures do not even bank bad debt is still worrisome (http://www.economistas.tv/la-morosidad-oficial-no- is-so /) As can be seen in other economic cycles figures have been more hopeless, it could be a cyclical crisis and give more reason for the optimists who think they can get out of it in months. But it is necessary to recover the credit market, without that status data will continue to deteriorate and, as we have seen this week, the suspensions of payments that began in financial, went to banks and then to insurance companies, will reach shops and industrial companies.
And that perception is reversing in the economy and stock markets, the beneficial impact of lower interest rates. If we add to this the fact that I commented on the need to sell assets as they lose value to dispose of cash, accounts for the balance of the week. The best quality of the bag-your-liquidity is now one of the biggest obstacles to the upward trend because it is one of the few markets to resort to if you need cash, even at the level of citizens is easier to sell shares even though much is lost to try to sell some other property. As positive aspects of this bad stock market week, two factors: the low volume on downhill (although it can mean that we are still far from the capitulation of course also of the soil) and the finding by the Telecoms sector as a refuge-of-date valid. Now we have to have faith in the famous meeting this weekend but particularly in the aspect stock market got more faith in the possible manipulation of the bullish effect by next Friday 21 to the expiration of some futures (which is the Ibex) and options almost all indices. In fact, statistically the next week is a pretty favorable to the stock exchanges.
Finally, it is very remarkable, despite a rebound from yesterday evening, the lower crude (although the effect of the weakness of € and other causes less understandable its effect on the price of a liter of fuel is less noticeable) of gas natural and generally of all raw materials. This is no longer seen as something positive on the stock exchanges because it's getting a lot of problems in economies where there are a lot of money invested ... the prime example is Russia. You may see manipulative maneuvers to prevent the oil-icon of all raw materials-stop-down and personally I hope to make a speculative-operation in a possible rebound in oil prices and gold. (Continue reading ...)
Droblo written by the November 14, 2008 with 337 reviews
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Since he is no longer the "gold standard" and a ticket does not represent anything physical but simply faith in its issuer has formalized the old adage that says that the basis of the economy is confidence. As long as there is confidence the economy may go well although there are points "dark". Why? Because if consumers and businesses and banks believe in a good future, spend, invest and lend and this will generate well-paid jobs so the virtuous circle will continue to operate and will continue to spend, invest and banks to finance projects future.
For that confidence is not lost speeches by political and economic decision usually mostly reassuring because if you lose falling economic growth and are entering a vicious circle: consumers do not spend, businesses earn less and reduce their investment and the banks get the credit because bad debt increases. And the order may be reversed as is happening with the current crisis: the banks reduce credit before the outbreak of the housing bubble and late payment by bad investments, get the credit to businesses and consumers, scared by all this, spending less and therefore less to buy companies that reduce their profits and, ultimately, generate unemployment. Besides the problem in society that this generates, it is clear that if unemployment rises and companies and banks earn less income are also lower because of the administration are charged less tax at a time that should increase social spending.
All this is very basic, nothing original but there is one factor that can undermine the confidence that usually goes unnoticed: the veracity of official data. And because they are not certain or not, but by the manner of calculating them. And it would take pages to explain how such data in the USA is distorted industrial orders each month with the orders of governmental machinery of war or the handling of the Department of Labor with the monthly employment data ... there are many examples. However, one of the most striking to me is the calculation of the CPI.
Take the example of Spain, whose CPI in 2007 was 4.2%, which should mean that average prices rose by 4.2% but it is clear that a TV-for example, do not shop every week or even every year But the milk (which went up 31%) is almost daily, or the pan (+14%) and fuels (+16.2%). Some say that the perception of these costs-to-be everyday makes us believe that inflation is higher than it is but I think that is the weighting system which is not fair.
How is it possible that if housing prices went up by 30% annual inflation was only 3% if half of the household budget goes to pay the house itself? Let us go further: In the mid-20, share prices in the U.S. grew an average of 3.5 times in five years, but the prices of consumer goods did not vary significantly. Should we conclude that there was no inflation? Why? Why exclude the rates of inflation, for no reason, financial assets? If low interest rates we had in Spain in recent years had flow, rather than mortgage credit, to consumer credit, the CPI would have been fired (instead of housing prices) and it would have suffered Official inflation.
The current base weights of 2001 and are adjusted each year minimally. The latest data available are these:
| Groups | CPI base 2001
Weights 2002 | CPI base 2001
Weights 2003 | CPI base 2001
Weights 2004-2005 | CPI base 2001
Weights 2006 |
| 01. Food and soft drinks | 21.86 | 21.93 | 22.60 | 22.28 |
| 02. Alcoholic drinks and snuff | 3.22 | 3.18 | 3.17 | 3.07 |
| 03. Clothing and footwear | 9.93 | 9.90 | 9.73 | 9.25 |
| 04. Housing | 11.03 | 10.68 | 10.69 | 10.71 |
| | | | |
| 05. Tableware | 6.36 | 6.41 | 6.41 | 6.17 |
| 06. Medicine | 2.81 | 2.75 | 2.68 | 2.72 |
| 07. Shipping | 15.58 | 15.32 | 14.40 | 14.91 |
| 08. Communications | 2.57 | 2.73 | 2.99 | 3.28 |
| | | | |
| 09. Leisure and culture | 6.73 | 6.83 | 6.76 | 6.78 |
| 10. Teaching | 1.74 | 1.67 | 1.67 | 1.68 |
| 11. Hotels, cafes and restaurants | 11.27 | 11.18 | 11.23 | 11.45 |
| 12. Other goods and services | 6.91 | 7.39 | 7.39 | 7.72 |
| | | | |
| TOTAL | 100.00 | 100.00 | 100.00 | 100.00 |
With these data you can see that inflation affects the poorest who are based consumption especially in the first paragraph.
Now that every reader will see if this table is in line with their usual costs and check that this calculation very similar in all the countries around us, is very subjective ... Of course, while we believe the data and return to the issue of confidence - Everything will be fine and accept that our salaries and pensions go up each year, the official CPI and so we think that we do not lose purchasing power.
At this official website you can calculate the CPI has risen far from the official dates (data from 1961):
PD - Still others are doing worse, look at the figures of the country most inflationary in the world:
Summary: press
Droblo written by the November 13, 2008 with 428 comments
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The nuclear power plant in Springfield where Homer works, shows us an excellent opportunity to discuss the monopolies and competition.
In this monopoly, has come mainly by two factors. First by high barriers to entry (not exactly cheap to build a nuclear plant and will need several decades to be paid off) and second because there are no substitutes (in the case of Springfield have total dependence on electricity produced by the plant).
In one of the best episodes of the Simpsons (Who shot Mr. Burns, Part 1). Montgomery Burns, the owner of the nuclear power learns that one of the substitutes for the electric light was threatening its dominant position and fix it by buying the competition:
Smithers: Well, sir, certainly has defeated all his enemies: the school, tavern, the residence of the elderly ... should be very proud.
Burns: [looking at the money in your wallet] No, not while my great nemesis continue offering our customers free light, heat and energy. I call this enemy ... The Sun. Since the beginning of time, man has yearned to destroy the sun. Siguiete ... And I will block it.
Smithers: Very good!
Bums: Imagine, Smithers: Electricity and heating power running all day
Smithers: But sir! All plants and trees will die, the owls will leave us deaf ... and the sundial of the people will be useless. I do not want to be part of this project is unimaginably diabolical.
Monopolies are not always so exaggerated, dangerous and unfair. Sometimes it is more than a company with the creation of a "cartel". One of the best known is the OPEC formed by the major oil-exporting countries (They control 75% of oil reserves) which will cut production enough to trigger a price increase. That is the basis of a monopoly, its ability to influence the price of goods.
Other times monopolies are simply making good business, as was the case of the agreement between Google and Yahoo! they finally broke last week due to the pressures that were legal. Another good example was the aggressive distribution strategy from Microsoft that led him to the European courts for more than 10 years.
In the interbank, there is no monopoly but sometimes I get the feeling that they are acting as a cartel What if there is no explanation that the Euribor is ticking so high a differential with regard to the official price of money?. Recall that the official price money in Europe is at 3.25%, we are talking about a spread of more than 1.25%. The number of transactions that ultimately intersect in the interbank is so low that if a few banks are agree are able to raise the value of Euribor above its natural value. (Continue reading ...)
Written by Carlos Lopez on November 12, 2008 with 291 comments
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The other day I read that the American figure that the state is being spent on trying to resolve the financial crisis is already 2.7 billion dollars, and that in a country that already, even before all this and much needed money. He also knew the number of jobs: 524 thousand new unemployed in two months. And I began to search for information on the actual state of U.S. finances. Let a couple of numbers and put all the zeros, that more than a trillion translates as billions and trillions when we lees and I had to document only on American websites:
- A day on November 11 at 09.14, the debt is U.S. $ 10.635.794.969.002, an amount that is increasing second to second, and in fact there is a ticking clock that will (http://en.wikipedia.org/wiki / National_Debt_Clock) and discussed here not long ago that going from 9 billion to 10 had to fix it. Currently 500.000.000.000 is increasing each month since October, a figure of growth that is expected to be sharply reduced because it is what they grew on average annually since 2003. In September the U.S. government expanded, very appropriately, the limit of indebtedness from 10.6 trillion to 11.3 but everything points that will run short in 2009
- The estimated GDP-American 2007 is 13,800,000,000,000, then the current debt is around 75% of GDP and it seems to get worse closer to 90% only by increasing the debt if we have to account that GDP may actually be reduced if there is recession, this could be even worse. They are not the all-time highs as can be seen in figure but let's remember that it was exceeded 100% due to World War II:
However, many countries are worse off and for years (from among the "big" Japan is close to 200%, in Europe and Italy, Belgium and Greece around 100%) the big problem is that this is only the debt State that is a fraction of the total debt of banks, families and American companies estimate is about 50,000,000,000,000, almost 5 times more than the public and more than 3 times the entire GDP. In Spain, where we have this sense of indebtedness total private debt is double the GDP. (Continue reading ...)
Droblo written by the November 11, 2008 with 243 comments
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One of the greatest unsolved mysteries of criminology English was the identity of the famous Jack The Ripper, and that among the suspects we find members of the British royal family, the doctor of Queen Victoria, a young lawyer, a businessman Liverpool, a Jew and a psychotic impressionist painter.
Fortunately, 6 years ago the writer of mystery novels by Patricia Cornwell, did not have anything else to do and gave to invest $ 4 million to reach the conclusion that the notorious murderer was Walter Richard Sickert, 28, a prestigious painter of the time.
Patricia, had the patience to buy up to 30 paintings of the artist and analyze them in search of traces of DNA but is not that painting is a good preservative. However, the writer did not give up and finally after much searching, found him in a letter from his wife (you know, never utilicéis language for hitting an envelope) that matched the genetic material of the murderer.
Without doubt, Jack was a guy who liked to go to parties and blog we have here in our professional Ripper, whose victim today, is the mortgage. So I switch to the article written by Oriol.
Today I wish to comment on how the shares of a mortgage to take a little awareness of the pros and cons of the government's proposal to help the unemployed, postponing for two years for 50% of the share mortgage.
The mortgage is a repayment of capital. Each payment is decomposed in a part of a separate interest and repayment of the nominal. We must be clear that each share will be paid interest on which is due during the last period. Nor on what is paid this month, not on the original debt. The structure of the payments may have several forms, but I will focus on two, the simplest and most common, and this will put an example with the following information:
Capital: 180,000 €
Fees: 360 (30)
Interest: 5% (we assume fixed interest, because it is conceptually the same)
Monthly interest: 0.416667%
1 .- Amortization of capital
This system is not used regularly but is the most simple and will help us see clearly how it accrues interest. In this case, the party repaid at each share is constant, so the duty less and less money, every time there is less interest burden and the share is decreasing.
In the period "0" give us the money, so there are outstanding 180,000 €.
In the period "1" we pay the first installment. The amortized in the share capital is € 500 (180.000/360) and interest are due to have cost € 180,000 over a period (one month in our case), with an annual rate of 5% (which would be the monthly 0.41667%. Interest is then 750 € (180,000 x 0.0041667). After paying the first fee of 1250 € (500 +750 = capital + interest) I have € 179,500 to the bank, so that the interests of the following share were calculated on this new amount of debt. 747.92 (slightly less than before because I have less), then the fee is € 1247.92 in (capital + interest) and so on. (See table)
Observe that in recent assessments, the interest is very low, as they are, for example in the past, due to be € 500 a month. The shares were also lower for the same reason.
2 .- quota steady or French system.
(continue reading ...)
Written by Oriol Carlos and the November 10, 2008 with 271 comments
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