SPAIN, THE GOOD NEWS: More haircuts….

THE BAD NEWS….It’s the ordinary Spaniard being scalped

Another satisfied c-c-c-caja c-c-c-customer

The Department of EU Commissioner Joaquín Almunia is obviously peopled by lateral thinkers: ‘Look, Iceland told the lenders to go stuff it and gave all of them a baldy haircut….let’s do that in Spain’. Boldly going where none had gone before, Almunia’s staff ordered a crewcut on investors….small savers of minimal means who purchased savings products linked to preference shares in in the lenders known as cajas, which specialise in the homebuying sector.

Kop this for Gauleiter sensitivity: the order that went out said that these savers losing their shirts “is a logical step if Spain’s banking system is to be saved”.

Startling logic: bankers overlend, con ordinary savers into buying risky stock, then shave them bald to save themselves.

This isn’t some piddling amount: most estimates put the sum between €25bn and €40bn.

Spanish bankers thus hoped that preference share holders would be forced to take an immediate haircut of between 50 and 70% – result!

But the actual result (almost absent from the Western MSM outside Spain) was a storm of protest from the citizenry. So now the Rajoy government is negotiating with Brussels to allow a compromise whereby these savers will suffer a haircut today, and then be ignored when the Cajas go bust be repaid over an as yet unspecified time period by their bank.

The talks with Almunia’s department (and higher officials in Brussels) are said to be “proceeding”. Says The Slog’s Brussels contact:

“I think [Brussels] will cave. They don’t need any more trouble at the moment.”

They may not need any chum, but somehow they attract it like flies to a turd.

Connected: Don’t mention the Icelandic recovery