I spent a fair amount of time, in a galaxy far, far, away and long ago, traveling through Spain. Ten or twelve trips, maybe, and hitchhiking mostly, and even though it was at the tail end of the Generalissimo’s tenure I still liked the place. And the people.
We’ve visited there a few times recently on this blog, too, to observe that the place is coming apart at the seams rápidamente, and judging from a number of reports on the militarization of their domestic police forces, and the extended powers being introduced, they seem to be heading back to the days of the Generalissimo’s Guardia Civil. The country is in desperate straits economically, and the “remedy” there is as it has been throughout all the troubled European countries—enforced austerity and the stripping of the public sector to protect the assets of the usual suspects.
Some of the law-enforcement developments are sinister indeed; Spain had a general strike back on March 29th, which had in excess of 70% participation. Nothing like uppity proles to get the defensive juices flowing among power and privilege;
In the aftermath of the strike, Catalunya’s notorious interior minister, Felip Puig, reacted with indignation and promised harsh new security measures ….[but] … the new security measures and police powers the Catalan government in particular is granting itself are not a reaction to the rebelliousness of the March 29th general strike, Puig’s hypocritical handwringing notwithstanding.
In the early months of the crisis, before any popular outburst could provide the excuse, it had already become clear that one of the only growth sectors for employment in the foreseeable future would be police and private security. Puig made it clear where his priorities lay from the moment he stepped into office in December 2010: among his first acts were removing the article in the police protocol that prohibited torture and removing the cameras from Catalan police stations – cameras that had proven their usefulness in the previous administration by catching frequent beatings and acts of torture carried out by police.
It was Puig who presided over the brutalizing of thousands of peaceful protesters involved in the occupation of Plaça Catalunya last May. Also under his tenure, private security in the metro and elsewhere have been given police powers. Violence and repression has always been this politician’s preferred response to popular discontentment.
Nothing pleases authoritarians more than the ability to simply scoop people up and imprison them without all that inconvenient time-wasting associated with trials and evidence and due process and such nonsense, so they’re working on that too;
And of course, Interior is pushing for harsher sentences for a variety of crimes. While Puig graciously admits that, “vandalism is not the same as terrorism,” he nonetheless proposes making the sentencing the same and allowing two years of pretrial imprisonment for public-disorder-related accusations, effectively giving the police the power to pass prison sentences of up to two years without trial.
As a piece in the Guardian the other day by the vigilant if somewhat obsessive Jennifer Able documented, the expansive “mission creep” of our own Department of Homeland Security doesn’t exactly have the US heading in the opposite direction either. A substantial part of the comment thread attending that piece became bogged down in an argument about whether we could refer to the US as a “police state” now without being accused of hyperbole. Pointless.
What is not pointless is to observe that Police States do not simply materialize out of the blue— an awful lot of infrastructure is necessary to operate one, and that takes time to build. Certainly the US is not a Police State if the benchmark comparison is Burma, say, but it’s equally certain that there is one hell of a lot more infrastructure in the US now than there was yesterday, or last week, or in the last twenty years that would facilitate one, and we show no signs of slowing down. So no, we’re not a Police State in the sense that so many other places are. We’re working on it though.
But back to Spain, and its economy. Oh yes, and magic.
It seems, along with a lot of other institutions, Spain’s Deposit Guarantee Fund (DGF )— something along the lines of the FDIC deposit insurance fund here in the US—has run out of money. All hands on deck then to do something about that. Never let it be said that the denizens of the World of Finance are short on ingenuity when the books need a thorough cooking;
The solution to this particular problem the authorities have hit upon is comparable to the most recent exercises in financial creativity in Greece (it is the extent of creativity that is comparable). The government doesn’t want to contribute anything to the fund in order to be able to meet its deficit target, or rather, not miss it too badly. So the banks are going to lend the fund €24 billion, with their individual contributions graded by their market share (initially, €12 billion will be disbursed).
If you’re still with us, the short version is that the banks are going to lend the fund that is supposed to bail out the banks the money to bail them out. As Exane’s bank analyst Santiago Lopez Diaz notes, although the loan is a true contingent liability, it won’t (at least at first) be influencing earnings statements – except perhaps positively, as the banks will book interest on it! As he notes, this is simply astounding financial alchemy.
If you have the heart for it, you can follow the links to read all about it in more detail. Basically the banks, which are in trouble, are lending the sovereign (which is short on funds) the money with which the sovereign will, um, bail out the banks. A transaction, if that’s the right word, which will perhaps even improve the banks’ accounting statements by counting the interest as an “asset”.
Somebody might be able to come up with a way to successfully satirize that. Any takers?