Bankia? No Thankia.
Political hacks capture Spanish finance.
Jun 11, 2012, Vol. 17, No. 37 • By CHRISTOPHER CALDWELL
Believe it or not, the directors of the European Union have a solution to the Spanish banking crisis. It involves handing over to the directors of the European Union the authority to run the Spanish banking system. Last week, José Manuel Durão Barroso, the (Portuguese) president of the European Commission, called for a “banking union” with a bailout fund. Mario Draghi, the (Italian) head of the European Central Bank, backed Europe-wide banking oversight. Both of them seemed to be talking about establishing a Brussels-based equivalent of the FDIC—which would involve giving European bureaucrats more access to all Europe’s national treasuries—but they left the details vague.
The vaguer the better. Since the bank-and-government-debt crisis began in Greece two years ago, Europe has set up a number of structures to provide liquidity to troubled banks: First there was the European Financial Stability Facility. Now there is the planned European Stability Mechanism. It’s one-for-all-and-all-for-one. Should a country get into trouble, the rest of Europe will back it up.
Unfortunately, most bailout plans envisioned Spain among the bailers, not the bailees. It is becoming apparent that the list of countries that will not under any circumstances need a bailout has fallen to just a handful: Germany, Finland, Austria, the Netherlands, and Luxembourg. For Brussels, the debts of Europe’s mismanaged countries must now be “integrated.” This is a euphemistic way of saying that Europe’s well-managed countries must pay them.
Christopher Caldwell is a senior editor at The Weekly Standard.