Tag Archives: Spain

June 28, 2013 · 13:02

Exploitation fears for tax-payers

The Dutch NOS reported another go with banks in the view of business. Bernhard Wientjes has been voicing the opinion that some of the banks (ABN/AMRO and SNS Reaal) should be sold. It was brought in the air of ‘when you have no more money you start selling the silver cutlery’ would be the next step. As the Dutch government needs to cut 6 billion, the cutting spree could be a lot less. Well, in this matter I personally stand with Finance minister Jeroen Dijsselbloem who is not that eager to do that. There is logic for not doing this, as this relief would be for one year only and after that the cuttings would still need to be found next year. I am worried that certain business men are now in a state to strong hand certain political decisions. I leave it up to the reader whether those decisions are purely for the need of greed.

If business is linked to greed (often called ‘enterprising solutions’) then that would clearly fit in the views of Bernhard Wientjes. As chairman of the VNO-NCW it would be an enterprising solution that is right up his alley. The VNO-NCW is a fusion of the VNO (League of Dutch Commercial Enterprises) and the NCW (Dutch Christian Business Society). Their mission is to support and further the needs of Dutch corporations both on a National and international level. In this he is doing exactly what he is expected to do.

Yet, in this light, at a point where two banks would be sold far below value and at the expense of the tax-payers, one should clearly ask and look at the possible windfall for Bernhard Wientjes and his friends should this work out in that way.

There is a clear valid question whether the Dutch Silver cutlery is currently in a safe position. The reality of 6 billion of cutbacks will start to show a strangling result, yet, this was the danger all along when previous political alliances (2006-2010) were clearly pushing the outstanding invoice forward. Now that there are no more options, the consequences are likely to be dire, and as such in his position Bernhard Wientjes is clearly trying to look forward for Dutch corporations. I see this specific step as a dangerous one and until Dutch banks are clearly on a minimum set standard nothing should change. In addition, I am all in favour at present to keep these institutions nationalised to prevent their boards to just seek additional high risk gains at anyone’s expense to meet personal commission goals, whilst ignoring local needs (mortgages and such).

Even seeing these banks as possible training steps for younger jobseekers on the dole, to give them short term jobs whilst staying on the dole, would give them additional food for job experience. The answers that some view that this is not how it is supposed to be, I would counter, with ‘what solutions do you have?’. We need to change the way we think and operate. Instead of trying to balance which pocket the money is coming from, we should accept that the money is coming from the suit the government wears and see how far we can walk with this suit. Instead of staying on principle of keeping tabs what pocket it comes from, use the principle of it comes from us anyway and focus on instilling knowledge and experience. That will strengthen the young to get a good shot in getting something better with a decent chance. If you have any doubt, then consider that the Netherlands is only one of 3 countries where youth unemployment rates are below 10%. Many of the Southern European countries are way over 40%. If the future of youth employment is about experience, then make sure that the youth are getting a running start now is going to be important down the line. If their future could be a decent job in Germany, then giving them an edge as they compete with desperate youthful jobseekers from Spain, Italy or Greece is essential. Do not think that those kids are any less. Those who graduated from Universidad Complutense de Madrid are more than top Notch. 7 of their graduates ended up with a Nobel price and graduates from there ended up with 2 dozen of other internationally acclaimed awards. So, if we are looking at future events, getting the youth ready NOW will be an essential step.

Yet, this week has even more issues involving banks. A report that is due to be released tomorrow on advised banking changes. The ‘advice’ is to change the mortgage market. In the Netherlands it is currently possible to get a 105% mortgage so that the house and the notary costs and change of owner registration can all be covered. The commission chaired by Herman Wijfels is now advocating that the mortgage cannot be any higher than 80%. This is to prevent that the debt of selling a house at loss would end up hitting the banks. It seems that the banks are all over their need for ‘securing’ for the little man (read the average consumer). Taking into account that the average house in the Netherlands is around $350,000 the question, especially in this era of lack of funds is where on earth will a person get $70,000 in savings when the Dutch taxation system makes it almost impossible to get that kind of money saved up. They also mentioned that this should not be done until the housing market is stronger and prices are on the rise. Like that will help people to get the money. It is interesting that there is no mention of the much more reliable and fair Swedish system. Perhaps the report due out tomorrow will mention it, but I have not been privy to the full report. In the Swedish system a house often has a two tiered mortgage. You have the bottom part which envisions the gross off it (let’s say 80% for argument sake) at a low base percentage. The rest goes into the top part. Now that part (in my case) was almost 2.5% interest higher, but the mortgage was 105% covered. So instead of the unaffordable savings needs, we have a slightly higher mortgage. So, even if we have to accept a slightly cheaper house, we at least can get a house and not be looking at houses, never being able to afford any of it. The question becomes on what it was about. The fact that a report leaks is no news, but that the report leaks just around the same time Bernhard Wientjes is making a play to sell banks is a rather convenient coincidence.

These events are important to consider. This is because the same issues are playing in the UK. Consider that Lloyds is in need of an extension as they are selling 631 branches. This and the issues around the Royal Bank of Scotland do have links, as the UK government needs to cut cost by a lot more than 6 billion (having a Trillion in deficit makes that an awkward necessity). So will we see the same play as some are now seeing if they can sell banking interests at no more than tuppence on the pound? There is absolutely no known plans at present (in case you got scared or overly enthusiastic), but the issues remain, and the solution as such would be there in equal measure. To allow the young unemployed to become part of the bank on internships and training places, so that we can offer a solution where those seeking jobs will have actual work experience in their CV. These measures might seem small, yet the confidence boost that the younger jobseekers gain, could be the winning factor. In addition, extra hands, helping to boost the value of these banks would mean that when sold, they will go for a much better and more realistic value then they are currently set at. All this in a combined effort to strengthen commonwealth economy and their assets, for the simple reason that the European Economic outlook remains grim at best and relying on overly confident reports of economic prospects, that get downgraded quarter after quarter is not doing anyone any good.

G8 on a bicycle ride

Today, like most days, it is good to get this little jolt of inspiration by Dutch news bringer NOS (www.nos.nl). They illustrated a specific situation where the banks are failing. Whether it is intentional, short sighted or lack of whatever they claim. Banks are not doing their jobs. They have turned into commercial enterprises at the expense of everyone.

We all know that money is tight. We do not have anything to spend, and when I see something interestingly innovative that it could better both consumer and economy then it becomes a matter of public scrutiny, whether some should be allowed to continue the way they are and the way they are clearly not properly doing ‘their’ business.

Of course, the reality is that the Spanish banks are pretty much utterly bankrupt. So if a bank is described as “the connection between customers that have capital deficits and customers with capital surpluses.” So what should we think when the bank itself has come to severe deficit.

When a bank is subject to regulations, guidelines and requirements, I wonder if some should be allowed to call themselves banks. In addition, I am starting to have a few serious concerns in regards to these regulations and guidelines at present. If banks are supposed to have a decent foundation of reserves, the notion that a good idea failing moving towards to a profitable niche should raise questions.

A step requiring no more than 3 million Euro! This bounced as banks seemed to have ‘other’ priorities. When banks that seem to have billions vested in something and according to Basel III are required certain reserves. What on earth is going on?

Consider that a bank has EVERY cent levied in one way or another in a nation with over 25% unemployment rate; I would say that something seems to be wrong in my book. It should be considered that these banks are serving a population group by letting them skate on dangerous thin ice, which is how I see it. Of course the opposing view might be very true. It might be an idea that the banks see as a not so profitable one. Yet, the fact that this design is getting international interest seems to give weight to the designers view, not the banks view.

So what caused all this?

I grew up in the Netherlands, a nation that used to have a massive national monopoly on bicycles. Bicycles were almost 1:1 for every person living in that country. Cars were still a rarity. Today, places like Amsterdam, Leiden and Rotterdam rely on bicycle (especially the student population). I remember having to go 9 kilometres every day to school. So that was a daily 18 Km ride! Those were the days! So, even though I’ve resided in places like London and Sydney, where the rider of a bicycle has less of a chance then Bambi in a deer hunt, I remain optimistic towards the needs of bicycles on a global scale.

In addition, we could consider places like France, Belgium, Italy, Sweden, Germany, Denmark and several other places to realise that finding an investment like a novel version of the bicycle into a new era is a massive thing. The chance for an investor of getting a possible corner in the market with 3 million Euro should wake up those who have cash. Seeing it could also infuse the economy of Spain, then that investment seems a lot less like a gamble. I would like to add, that if I had the money I would run to that opportunity.

So, here we are!

A Spaniard called Eduard Sentis has come up with something so innovative it is hard to grasp that no one came up with it. He calls it the Urbike. When we think of bicycles, then we should consider the downsides. For me over history that has been two parts. The first is the danger of flat tires. Eduard gave an old idea new breath with a solid tyre, so no punctures ever. The second is that the chain of the bike can get dislodged. No problems, Eduard added a bicycle version of a shaft drive. So the two downsides I lived with are gone. It even comes with a navigator that is seriously rain and shockproof. (http://www.designboom.com/design/urbikes-by-eduard-sentis/)

This is innovation where no one had looked to for some time, or perhaps they did and the timing was off.

Why would people buy a bicycle? Consider that cars become more and more expensive, fuel prices go up and when you live against a wave of mounting costs then the old way could be the best way to get anywhere. Many will come up with excuses not to consider the car, but then, be honest! Do you really need a car to get bread and milk from the grocer? Do you really need to get to friends nearby in cars?

All that waste of money and then consider all those online options you get from those insurers after answering a ‘few’ questions. For the most you do not ever ask that much detail from the person you have intimate sex with, question after question! NOT ONE gave me a simple answer. They will claim that answers are not that simple. A bicycle is simple. You sit on it and drive. You should get some insurance, but it should be nowhere near the cost of a car insurance.

We seem to ignore in many places the fact that we all could use the workout a bicycle gives us. If all these governments are so into healthy living, the impossibility of Eduard Sentis not getting any funding is becoming more and more of a puzzle, one that might yield massive earnings down the line. I agree that this is always a gamble, but timing is presently on his side.

So is this about the bicycle or the bank? I think both need to be looked at. I think financial groups are now moving into margins where almost none are left. If the Royal Banks of Scotland had close to 40 Billion Euros revenue in 2012 (not all of that profit mind you), and they are in ‘decent serious financial predicaments’ then other banks should doing reasonably well. 3 million should hardly show up with the possible future revenues in store. You see, that is part of the question. What do we know about those margins they should have?

So an amazing innovation gives visibility to failing banks seem to be in question. The fact that the bicycle was offered to the Danes as they were not able to get funding in Spain only intensifies the outstanding question. The banks with the reserves they should have; the transparency in banking that should be and their status at present. Who is minding the store and are we getting the whole picture or are they too managing bad news over a long period of time?

So here we are, the G8 has started and their message is trade and transparency (well these two mattered here to me). Considering that India and China are also attending that summit, then the question should be, how did a project like Urbike not get any funding for bringing transparent international trade. It’s not like the 200 billion in bad debts in Spain will go anywhere. If Santander can pledge 840 million towards bad banks, in a place where the toxic assets have swallowed 38 billion (Sareb), spending 3 million (less than 0.0001%) towards something that could propel trade and economy seems to be a good thing. I wonder if that will come up during the G8, or will it in the end be another vessel to move into a Syrian discussion. Perhaps weapons trade has a better return on investment? (It seems to work for Russia)

As we move into the latter half of another year, too many eyes are averted to a growing amount of toxic bank moves. A cost that is very likely to get left with taxpayers in the end.

It seems that we are all taken on a bicycle ride, a bicycle that got never any funding to begin with.

Greed and the lack of common sense

We have seen the adverse effect of greed for some time now. Going back to 2004, we saw the moves that financial institutions made, and during those days, and in the aftermath of 2008, we saw how a chosen few walked away with hundreds of millions of dollars, whilst at the same time, leaving flocks of people beyond destitute.

The fact that this is still happening in 2013, gives way to a collection of requirements that seems to be non-considered by too many people who should be in charge of protecting the population. Why do governments remain in a state of enabling this level of unacceptable transgressions?

Let’s take a look at the events that are making my blood pressure dangerously rise (again).

On the 10th January a non-formal claim was made by Dutch businessman, Ronald Ras, related to the “Mosa Trajectum” golf resort near Murcia in southeast Spain. The claim is OVER half a billion dollar. Should this pass through then this bank will require serious levels and financial amounts of support. The bank claims that Mr. Ras owes the bank in excess of 165 million dollars. So this could be all ignored as a simple situation (he states versus they state, you know the legal drill).

The issue that makes this event escalating is that this bank received a billion dollars of aid in 2008 during the height of the financial crisis. This bank is also due to announce its restructuring plan which would scrap a massive amount of jobs (a mention of 750 scrapped jobs was mentioned by UK Reuters). In addition to this, the Dutch bank and insurance group SNS Reaal is considering a so-called “bad bank” option so they can push their bad ‘property idea’s’ into a different bank and bookkeep it out of existence. Shouldn’t people go to jail for ideas like that?

Actually, that is not what this is about, but the background is relevant to all of this.

What is interesting and what is the issue, are the amounts just this one bank requires. If we add only these two issues together, then we get to 1.5 billion dollars (2 out of how many issues?). Compared to the population of the Netherlands, the required assistance comes down to $1000 per citizen. So this one bank needs more funding than the entire population can afford. This is the 4th bank in size and their needs have become a fair size of the national debt. How can this even be allowed? Take into consideration that almost a third of the nation makes less than 20,000 euro’s a year, so their share of $1000, will be more than 20% of the taxes they pay. If you look at those parts, then it is clear that the Netherlands is growing deeper and deeper into a hole that no budget can close.

On the other side you should consider the luxury property issue that someone is trying to get done in another nation. It took me almost a year to get one mortgage deal for $50000 within that country, and then it was only possible with almost impossible conditions and guarantees. This ‘person’ gets hundreds of millions and no one installed a proper legal engine to make sure the bank does not get hurt by some of their decision makers?

How does allowing this even compute? In all fairness, the bank did make the statement that this claim has no foundation. Still, how does it get this far? Perhaps we should take another look at the bank too?

So let’s take a clearer look at the issues one part at a time.

1. Someone has an idea for a real estate project worth gold course and as such he gets the financing arranged.
So this first point means that the bank has drawn up agreements, contracts and set up clear lines of credit, as well as the rights and duties of the person who they are lending the money to.

So if this first point is clear, then there is a clear path, and all what happened today on the news is just hot air, with no foundation (the Bank stated January 10^th that there is no foundation for the claim).

2. The people behind all this are setting up a good quality sales team (or they should be), all with clear targets. I need to mention here that these targets should be achievable. Under these conditions there is no excuse for sudden financial breakdowns. As we all know, these breakdowns did not affect many in the financial institutions as they walked away with a golden handshake worth mega millions.

Now here is the first issue. I did some digging into their visibility.

– Their web presence is extremely low, and if there is any that is valid, it is not that visible. THEIR FIRST BIG MISTAKE! I was going over 3 sites, they all showed a lack of professionalism, it is limited in languages (Spanish and English only) and the places they offer are between 1.2 and 1.5 million euro’s. It is interesting that the group who could afford anything like this is less than 0.01% of the Dutch population. So this is an exclusive project that over 99% cannot afford. Now, even if you consider this in European terms. This is a place only less than a handful can afford, and those people rarely all want to live together.

– If we consider this as a pure resort for vacations, renting/leasing a time shared, or just on a hotel based foundation, then this plan calls in even more questions, as there was little or no infrastructure. This reminds me of the tourist approaches we saw during the 90’s. There were loads of what they would call a time share option, most of them went sour and plenty of people got left holding a bag without value.

So if these two points did not call in questions, then look at the next:

I looked at:

– http://mosatrajectum.com/venta/
– http://www.mosatrajectumproperty.com/

These places are all about that project, and I personally find them not that professional (considering the price of the houses), not well conceived, error prone when it comes to the languages and lacking in other ways too. If a faltering sales system is the cause of a failed project then these two links could be regarded as strong indicators that this all failed for many more reasons, not just the economy.

Several of them should be considered as failings of project managers. 1.3 million Euro houses are not realistic. Even before the economic crash it would be unrealistic for many people. It becomes even less interesting when this is all build in a place where there is nothing. I personally see this as the idea of someone seeing their pupils change to euro signs and greed took over (really quickly). Even after the failings of the world economy, this project could have survived if this would have been properly aligned to any kind of realistic market. Yet, even though over the last 2 years the group of Spanish unemployed was OVER 20%, overall spending was down a lot more (not just in Spain), nothing seems to have been done, and now there is a claim? This I deduce from these sites, and searching through several other sites, not making decent mention of this real estate location.

From the data I have now, I would side with the bank, but questions should be asked on all levels. Especially considering America had their Freddie Mac and Fanny Mae issues in 2008, and this plan seems a lot less stable then the huhu idea’s Mac and Mae were having.

So how did the bank fail?

Not sure if call it a fail, but if we look at several of their projects, some that are unaffordable, questions on how these projects are such losses. It is even more important to look at how the numbers are accepted into starting some of these projects to begin with. If some of these places are more decently priced (even considering a minor loss) then it could have drawn prospective buyers and even at a loss, a nation of taxpayers would not be called to pay the bill of over greedy individuals not setting a realistic goal. Consider the Spanish resort example. As the information of the village, even when English is selected most of its information comes in Spanish, I would think the bank, or better its account holder should have kept a better eye on this. This is 100 million plus at the start, so keeping an eye on your investment is always a good idea. If we consider a current projected cost amount of 250,000,000, and divide this by 3100 houses/apartments currently projected, then each house would be less than 100.000. If we consider the costs involved then this solution is a whole new idea.

Should the developers complain? Of course not! They failed, pure and simple. The bank moves in, confiscates the lot and sells as needed. Is that what the developer wants? No! He wants his profit, his ego. It seems to me that for such a reward he should have succeeded. This is not the only project that bares scrutiny. If we consider some of the other building scandals that the Netherlands have faced, then I wonder why these levels of over pricings and overinflated values are not better investigated.

We are looking at a new approach of banks to write of overpricing and bad ideas. Why push this to the taxpayers? These groups are getting too much protection all over the place. The Netherlands are just one example. The US example of Freddie Mac and Fannie May are even more unacceptable.

Tag Archives: Spain

Exploitation fears for tax-payers

G8 on a bicycle ride

Greed and the lack of common sense

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