Has the ECB gone too far and will it be fair with Spain?

This is a major discussion topic with colleagues and friends at the moment :The famous Lisbon Treaty. We all know that at the beginning of the year Mario Draghi the newly appointed director of the ECB, but previously European Director of Goldman Sachs, went probably too far by printing 489 billion euros and handing it to 523 European banks with absolutely no strings attached, and with no upper limit on the amount he was prepared to lend. I think there is something very badly wrong with a system where the US Fed Reserve managed to secretly print 1200 billion dollars for the Banking system at 0.01% interest and governments like Greece have to pay 600 times more due to the fact that the ECB won’t lend money to states but it will lend it to Banks at 1-1,5% interest who in turn lend it on for 4-5% at a massive profit. Why can’t the ECB work like other central Banks for example the Bank of England or the Federal Reserve? Why can’t they work more directly to help European countries by buying up the debt? If they are all going to print money anyway what difference does it make? Contrary to the widely accepted idea that the ECB is prevented from lending to governments by the Lisbon treaty, it turns out that the ECB can perfectly well lend money to "publicly-owned credit institutions", as stipulated by paragraph 2 of Article 123 of the Lisbon Treaty.

This fact has been clearly (deliberately?) ignored by Mario Draghi. He has publicly refused to consider lending to governments, apparently backed by the Germans, preferring to lend unlimited amounts of very cheap printed money to commercial banks that they immediately stick under the mattress, The Spanish people are still not seeing any loans, any entrepreneurial financing and cash flow credit is pretty much impossible to get any significant sum.  Effectively, there is no limit to the amount of money that the ECB is prepared to print for Banks, according to a representative of the ECB in a recent interview. With the Spanish bailout on the horizon, many are worried that the conditions will be as harsh as the ones enforced on Greece, which is obviously not working. The big underlying question is when the money goes to banks there are no questions asked but when it goes to Governments they step into politics. Is it going too far?

 This is exactly why the break up of the Euro is imperitive. How can individual governments run the country when they are bossed by the fat cat banks. To be dictated to by the Euro Central Bank who then look after their Bank "buddies" in the associate countries is dispicable & very dishonest, but then the European Parliament is notorious for it.  For years it has been known that it was the greedy banks from all over the western world who started this mess. 

I know the do gooders are going to come out of the woodwork but the Spanish government would be able to do so much more if they were to have complete control of all monies. The Spaniards have to leave the Euro they now have no choice. Yea, tell me about devaluation, that the new peso will only be worth half the figure, but exports will rocket as they will then be cheap to buy in comparison. Tourism would massively increase as the cost to holliday in Spain would be cheap & would know no bounds, the country would start to vibrate again. So, you will say, savings in Spanish banks wil linitially suffer, but it will be only temporary. Spain would become the strongest economy in Europe possibly the world because there are so many raw commodities, the most important being the Sun, the wonderful Land & THE PEOPLE. Spain should also consider leaving the Union completely. Switzerland & Norway manage, the EU beg to deal with them, not the other way round.

As a final proof the UK in the seventies was in an awful mess & were forced to devalue, but then the boom started causing Prime Minister Macmillan to say to the British public, "you have never had it so good".

So the next thing you gonna try to throw at me is the reprinting of the peso & the changeover. NO PROBLEM.  When Slovakia split from the czechs  after the wars. The changeover was effective from a Monday so on the Friday evening prior every bank was visited by a Government Official with little stamps & every note altered. The swap over was completed in just a few days.

Only one country got it right, Iceland. Money is now totally controlled by that Government who themselves are openly accountable to the people. The Bank executives responsible were not paid extortionate bonuses  but were rooted out and sent Gaol.Fat cat bonuses are now only paid reasonably & for honest profit. Losses have bonuses forfeited, as they are for dismissals. But most importantly Iceland is repaying their debts. They have repaid the UK to whom they owed Billions in full & are also doing so to neighbouring Counties.

 Whilst I agree it would be better for Spain to withdraw from the Euro and they could then set their own interest rates etc, I doubt if it would ever become one of Europe's strongest economies.  Exports would be cheaper but imports would increase.  Then you'd have the double whammy of a devalued currency plus extra cost for imports which, like UK in 70s, would cause inflation.

Just a couple of points, Spain used the Peseta, not the Peso which is Mexican currency.  

Harold Macmillan said you've never had it so good during the election of 1959.  As he ceased being Prime Minister in 1963 I don't think the events of the 70s had anything to do with it.

Leaving the EU entirely would not work in Spain's favour.  The EU has been, and continues to be, good for Spain except for the monetary union situation.  I agree, one size does not fit all and a strong German economy with low interest rates may suit Germany, for example, but not Spain where the economy all round is getting weaker.  

Spain is hardly rich in raw commodities.  It has no oil or significant minerals.  The car industry, once one of the biggest employers, has been in decline for some years.  Yes, it has the sun.  But if that were a sign of wealth, Greece would be up there with the big boys.

What Spain should/shouldn't do are matters of opinion, and pointing out your errors is not arguing.

 Tourism, Wind,coal, lignite, iron ore, copper, lead, zinc, uranium, tungsten, mercury, pyrites, magnesite, fluorspar, gypsum, sepiolite, kaolin, potash, hydropower, 3 types of natural salt.,arable land. Crude oil & natural Gas has also been produced in recent years

Total rubbish Buffalo look sonny, its not half thought out at all.

This message was last edited by gerrryuk on 22/09/2012.