Submitted by Mark J. Grant, author of Out of the Box,
The Lords of Chaos are
The enemies of Logic,
The jugglers of Truth
-Michael Moorcock
Whether it be the plains of Asgard, the fields of Mordor, the yellow brick road in Oz; I can recognize and appreciate fantasy. I take delight in meandering off in my mind when emerging myself in one of these pieces of fiction. This morning I can share with you that a new and quite imaginative fairy tale has been told and it has been spun by the government of Spain.
Spain, as you know, and no matter how the story is fabricated, was bailed out by the European Union. The money was lent to the banks so that Spain does not have to count it as sovereign debt even though the country guaranteed the loans. A nod to magicians and the clever use of a sleight of hand trick but the truth is readily apparent. Then, having mastered that trick they are on to new and grander schemes.
Madrid tells the truth in the same manner as a sardine naturally climbs mountains.
Spain has set up a "bad bank" known as Sareb (Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria). This operation has $66 billion of Real Estate loans and property as their assets we are told. So far they have sold 700 properties and they claim they can achieve an annual return on equity of 13%-14% over its fifteen year tenure.
You see, I was not joking; Spain is out with a wonderful new fantasy competing with the Hobbits, "he who cannot be named" and the land of the Munchkins. Who knew, besides the Portuguese, that the Spaniards could be so inventive? Madrid has outdone itself and Don Quixote has returned to the capital.
Sareb has roughly 107,000 properties and 90,000 loans they tell us. The loans are collateralized by about 400,000 pieces of Real Estate. This all sounds fine as presented but then Sareb started looking at what they actually owned. "Oh no Pancho," 150 loans were all collateralized by the same apartment building. "Oh no Rodrigo," six banks had all lent money to one downtown building and each bank had the same collateral. "Oh no Manuel," we are holding a deed as collateral on a building that does not exist. The problem is that each example that I have presented is not an isolated instance. Such a good tale; invisible buildings, documents relating to non-existent people, collateral shared by everyone and held at face value at Sareb.
What to do, what to do? So Spain turns once again to Clifford Chance. This is the same firm that assured us of the health of the Spanish banks. Another fairy tale please. One more story told around the campfire to engage the investors. One more piece of Pulp Fiction.
If there was a Pulitzer Prize for fiction Spain would be the sure winner.
"Take care, your worship, those things over there are not giants but windmills."
-Miguel de Cervantes Saavedra