The Great Spanish Crash, Part 3/4 Reply

Bancaja Valencia disasterThis is the third part of the BBC’s documentary on the Spanish economic crisis. The bulk of this section is a case study of the abuses of just one–perhaps the most egregious, along with Caja Madrid–of the country’s Cajas de Ahorros, as the Spanish regional savings banks were known: Bancaja of Valencia. According to economic historian Jordi Palafox, Bancaja board member from 1998-2006, their board of directors comprised essentially three groups: savers, businessmen who borrowed heavily from the caja to finance their businesses–a clear conflict of interest–and politicians who were financing their own sometimes pharaonic projects with Bancaja money.

The outcome was foreseeable for anyone who had eyes to see. Palafox did see and tried to warn the other members of the board, but to no avail. Ten days after the fall of Lehman brothers on September 15, 2008, in a visit to the New York Stock Market, Spain’s prescient president at the time, José Luis Zapatero, pronounced these resounding words: “Spain has, perhaps, the solidest financial system in the international community…”

Here’s the link to Part 3:

Video courtesy of rose496900yt1


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