Don Quijones: Round Two Of The Global Financial Sector’s Takeover Of Spain

By Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media. Originally published at Testosterone Pit

When it comes to dodgy landlords, few have it quite as bad as the tenants of a growing number of social housing projects in Spain. At the beginning of November 2013, thousands of social housing occupants, both in the capital and beyond, received letters notifying them that the government had sold their apartments. In many cases, their new landlord was a little-known, innocent-sounding investment fund called Cibeles.

But just who does Cibeles belong to? Well, it didn’t take the tenants much digging to uncover the real owner of the investment fund – and by extension the houses they lived in. It was none other than Goldman Sachs, the dreaded reaper of Wall Street. Cibeles’ investors, meanwhile, include such household names from the hedge fund industry as George Soros and John Paulson.

Naturally, they were a little shocked to realise that their rather austere dwellings were now the property of some of the richest individuals on the planet. To their initial relief, they were informed that “their rent contract would not suffer any change.” However, what will happen once their contracts run out is a lot less clear. According to the socialist MP Antonio Fernández Gordillo, once the investment funds’ obligations have run their course, in roughly two and a half years’ time, the companies could offload each property for up to 187,000 euros a piece [assuming, that is, Spain’s property market finally turns the corner – a big “if”]. Whatever happens, the bank and its illustrious clients can expect a healthy return on their initial outlay of 67,000 euros per flat — especially given that, unlike Spanish residents, overseas investors like Goldman get to pay zero percent corporate income tax on their returns.

Put simply, it is the mother of all gift horses, a steal cooked up between Madrid and some of the world’s biggest banks, hedge funds and private equity firms – as usual, behind closed doors, under cover of darkness and with zero public consultation.

A Perfect Partnership

The fact that the Spanish government has proven so amenable to the demands of the world’s biggest financial players should hardly come as a surprise. After all, the banks (sometimes confusingly referred to as “the markets”) own just about all our governments. What’s more, the Rajoy government has already amply demonstrated that as long as it, too, gets to wet its beak in the fountain of easy money, then it’s more than happy for investors, both domestic and foreign, to help themselves to whatever they want of Spain’s national wealth.

As Juan Hernandez Vigueras reports (in Spanish), when the government was drawing up plans for Spain’s “bad bank”, the Institute of International Finance (IIF), one of the global financial sector’s biggest lobbying groups, dispatched Josef Ackerman, then president of Deutsche Bank, and Charles Dallara, the IIF’s managing director, to lend a helping hand with the trickiest parts. And judging by the resulting legislation, the government was more than happy to accept their assistance.

One result of said “collaboration” is that Madrid city council is now selling off batches of social housing at a much lower price than what it originally cost to build them. As the Platform of Mortgage Victims (PAH) told El Diario, “the average price at which they’re selling the flats is 67,000 euros, adding up to a total of 201 million euros – whereas their initial construction cost 300 million euros.”

It is, by now, a depressingly familiar story: the government signs nonchalantly across the dotted line, gifting the banks yet another ill-gotten fortune at the people’s expense.

The Arrival of the Wingless Vultures 

Now, with the dust settling from its construction blow-out, Spain is laying out the red carpet for the wingless vultures of Wall Street and the City – vultures like Paul Singer, whose Cayman-registered fund Elliot Management Corporation last year tried its damnedest to trigger a default in Argentina, and is now looking to asset-strip two Galician savings banks.

The list is growing and features some of the biggest names in global finance – names such as Blackrock, Barclays, Deutsche Bank, JP Morgan Chase, Spain’s Santander, Bill Gates, New York hedge fund Davidson Mempner Capital Management LLC, and Venezuelan billionaire financier Juan Carlos Escotet.

While the financial press raucously cheers on Spain’s phantom recovery, the next stage of the country’s crisis begins: its transformation into a full-blown rentier society. Already tens of billions of euros of public funds have been squandered on keeping Spain’s last remaining banks afloat.

But that was just the beginning: now comes the real plunder, as the Spanish banks’ juiciest real estate assets are quietly transferred onto the books of the world’s largest financial institutions. Shopping malls, office buildings, industrial estates (for those with a voracious appetite for risk) and residential properties… all are being snatched up at bargain basement prices.

Of course, none of this is happening by accident. The pillage of Spain, as with that of Greece, is going according to a finely-tuned script — a script that, as Greg Palast laid out in his 2013 exposé, “Larry Summers and the Secret End-Game Memo“, was carefully prepared at the turn of this century by a small coterie of US Treasury officials and banker big-shots.

Their short-term goal? To rip apart financial regulation across the planet. And long-term? Nothing less than the complete consolidation of financial power and wealth across the globe, a process that is unfolding and gathering pace right before our sleep-filled eyes.

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21 comments

  1. Ignacio

    I wrote about this few months ago, when Blackstone bougth some “residential packages” at discounts that would have been a dream for many spanish households. But you see, it’s much better to sell them on the cheap to foreign financiers rather than offering steep discounts to the public. This is specially painful when you consider that many of those houses were developed as “social housing”. Adding insult to the issue, the government said that those sales were a proof that confidence on the country had returned in international markets.

  2. Steve in Dallas

    Wow… this precisely demonstrates ‘globalization’ and ‘privatization’ (i.e. crisis creation and management… the shock doctrine in practice)…

    There is absolutely no doubt at this point, around the world, ALL public assets (e.g. roads!) are being sold by corrupt politicians to private financiers for small fractions of their true asset values (using 0% leverage-from-thin-air!). The whole world is literally giving away its public infrastructure for no other reason than to transfer more wealth and power (i.e. maintain 20-50% ROIs!) to the global investor class.

    NOTE: yes, the brainwashed 99%, stilled foolishly tuned into the finance/corporate-controlled media, will argue… “there should not have been ‘public’ assets in the first place”… but that does NOT ‘excuse’ or ‘justify’ the fact that ONLY rich and powerful criminals are benefiting (HUGELY!) from these ‘global transfers’.

    The 2008 economic crisis was by far the biggest ‘organized crime’ in history. And NOTHING has been done to stop the criminals. This article exposes a single crime. Just one small example of how ‘organized crime’ is globally looting one country after another. The rate of global financier wealth and power accumulation (i.e. organized crime) is (not just continuing but) accelerating while the media everywhere tells us (over and over and over) that 20-50% ROIs for the 1% upper class, 20-30% unemployment for the 90% lower class, and ‘party on’ for the 9% middle class is the “NEW NORMAL” (Way to go Thomas Friedman! Globalization, free markets, and total lawlessness ROCKS!)

    1. Banger

      Well, what you say is mainly true but the fact remain the public still supports this system and we need to understand why. It is not only that the mainstream media has become, essentially, a series of PR firms for various cliques in the international oligarchy but there’s much more to it. The public is willing, in my view, to go along with things as they are as long as the system delivers the goods, i.e., access to the global marketplace. I believe the oligarchs can deliver this to most people in the powerful countries of the world at least for the next decade. The old days of fast growth and rising living standards are unlikely to come back but if you give people cable and the internet and the vast array of carefully engineered entertainment they will remain content, all the while complaining about their various tribal concerns.

      To put it another way–the “people” do not want democracy because most people want to be led by those they consider “the strong.” That’s just the way we are at this point in our evolution and I’ve seen nothing in my nearly 65 that contradicts that. The most massive crime wave in U.S. history, as you note, goes unpunished today. When Occupy started “the people” had a chance to consider the issue–it was well-publicized, the memes were streaming but nothing took–instead people were wondering why the demonstrators didn’t have jobs and were upset that they looked dirty (sleeping in the park with no showers might have had something to do with it?) liked to play drums and looked like malcontents in the greatest country on earth and liked to play drums! Americans did not want to hear the message so their minds were gently led to conclude that the protesters were worse than the Wall Street criminals they were protesting against. They decided against justice because cultural issues were dominant.

      1. Carla

        “Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object, evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
        ― Thomas Jefferson, The Declaration of Independence

          1. Carla

            In my view, this is key: “mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.” But I didn’t want to take it out of context, and so the point was lost.

            But I do think that perhaps human nature has not changed so much… or at all. The evils are still sufferable, so we are not yet disposed to right ourselves by abolishing the forms to which we are accustomed.

            Not YET.

            1. Banger

              We lack courage in this society. That virtue along with most others is in particularly short supply in a society that values comfort and selfishness above most things.

      2. Synopticist

        That may be true for the States, but I can’t see how the Spanish are just lapping this up. Weird.

      3. ron taylor

        Six major and interlocked corporations control about 95% of all the actionable information available on a timely basis to the masses . Those corps must adhere to the agenda of the NWO ruling cabal or face extinction . That much control of info consitutes ” mind control ” or control of mass consciousness . Much of the info that opposes the NWO agenda is also controlled by the cabal . Any genuine opposition info that is not controlled by the cabal would constitute less than 5% of mass consciousness and could easily be snuffed out by the opposing 95% if that 5% ever gained significant traction . We are doomed . The internet does not have the same kind of simultaneous broadcast power to move the masses as does television and radio . The One World Corporate Government which is taking shape will soon ( 5 , 10 , 20 years ) have total control over the informational wild frontier of the worldwide internet . We are doomed unless we can get our first amendment rights carved in stone and signed with blood .

  3. down2long

    When I read this, still in the rumination phase of yesterday’s NC piece on rent control and the $17million dollar payout to the last holdout holding a rich developer’s conversion, it occured to me that yet again, the oligarchs had devised an end run. This is PUBLIC housing owned by the government that is being sold to the oh so charming Soros. John Paulson, Paul Singer, Goldman, JPM. If there are any foreclosed units in there, remember that in Spain you lose the property but you are still on the hook for the bill.

    I had read that Soros was licking his chops to buy more distressed property in Spain. I didn’
    t realize it was government housing.

    There is already a nostaligia here in L.A. for the old “mom and pop” landlords. Of course, we are no match for these Fed funded voracious demon spawn like Singer, Paulson, Soros, Buffet.
    This is all getting so horrible to contemplate I can’t even get my head around a summation sentence. I think perhaps we all need to have a cynide capsule stictched to the inside of our mouths the way the Nazis did in case a quick exit is needed.

  4. allcoppedout

    Is the truth, somewhere in this, that the thrusting, dynamic, creative, innovative, entrepreneurial private sector is actually so pathetically dull it needs to prey on utility-style business areas like housing, energy supply, water and health? When absentee Scottish landlords wanted land held and farmed by the same communities for over 500 years, it had trouble finding people to burn them out. Old hegemonies were soon broken down by private sectoring the bailiffs and and stewards (bags of 30 pieces of silver) and buying new law. Enclosures continued after the abolition of slavery and this is what we are witnessing now. Scottish families fled to fish in open boats or wipe out indigenous peoples for American masters.

    Today’s Enclosures leave people with nowhere to go, unless there is a plan, say, to harvest Africa.

  5. TomDority

    Same old Chicago school playbook playing out all over the world. This playbook was cooked up a hundred years ago when the economics proffesion was taught to ignore land as the passive part of all production…. Land, Labor, Capital.
    Playbook:
    1) Inflate asset prices beyond the means of most of the peoples ability to pay. (IE financialize hard assets to create a compound interest stream that outruns the rate of economic expansion and whos returns are used to further inflate asset prices) Note: the usuall asset price inflations are aimed at nessasary goods….land, food, infrustructure. Also, for real effect, starve the government of taxes and redirect taxes onto those items nessasary for production – labor and real capital and away from land and financial capital.

    2) Maximize the compound interest stream by raising rates under the premise that credit is at higher risk due to deteriorating economic conditions. (The poor/less credit worthy continue to pay higher and higher prices for everything required to survive… this is driven by interest rates, fees, and increased taxation….of course those that make money by employing economically rent extractive methods are rewarded through lower taxation….it’s a self generating loop.)

    3) Sell off the public space to private individuals to pay of debt created by interst streams, asset inflation and an unjust revenue system.

    4) take advantage of political and governments starved of taxes and torn by the public’s unfathonable struggle to just survive (common results are war, class war and break down of the public’s trust in democracy). This, of course, opens the door for tyranists dressed in commons interst clothing (see kleptocrates, oligarchs etc.)

    5) Take advantage of the natural resources flooding the market because Sovereign nations are selling resources at rock-bottom prices to help them pay off debts inccured to the oligarches who set them up in the first place….Sovereign debt servitude.

    6) Rinse and repeat

    1. allcoppedout

      There are standing and contingency plans attached, such as:

      Point Islamic friends at Russians.
      Point Ukrainian friends at Russians.
      Point Japanese friends at China.

  6. TomDority

    How an idiot like Norquist was able to perjure so many of our elected (congressional members) who took an oath to uphold the constitution by having them sign a no tax (chicago school pledge) pledge – thus putting themselves in a position of serving two masters…is beyond my ability to comprehend.
    Norquist is a prime example of a coward and, those that signed his pledge are equally cowards, guilty of perjury and deserving of contempt.

    We have a simple solution. De-Tax those that create real wealth and maximize tax upon those that extract wealth from those that created it. Tax the economic, rent extractive segment of our economy to 99%. Bring those taxes, thus rendered, back into the commons.

  7. allcoppedout

    All we need is a bit of law and a fleet of well armed Boston Whalers pointing guns at tax havens.

    1. ambrit

      Good Sir;
      Are you suggesting that Justice is fungible? The so called “Money” that ‘resides’ in those tax havens is. The ‘masterminds’ behind the phenomenon should be the primary targets. While we’re at it, since corporations are now ‘legal persons,’ it is high time for some intrepid soul to bring suit against said ‘persons’ for some capital crime or other. I’m quite certain the crime is there for each and every ‘corporate person.’ The interesting bit is; how does the state put to death a ‘corporate person?’
      Cheers!

      1. Skeptic

        “corporations are now ‘legal persons,’ ”

        Yes, this legal concept should be tested in the area of Crime.

        Another twist on it is that legal persons should also have the rights of corporations. Thus, we would all have the same tax deductions and loopholes as corporations. I would be able to deduct my housing, my transportation, my entertainment, my food, my healthcare, my marriage, my divorce, etc. just like corporations. When no one pays taxes anymore, there might be some change.

        The Legal Egals seem to be silent on the above probably aware that the wrath of Mammon would swiftly fall upon them should they speak out.

  8. BigRed

    What the author describes – buying already existing flats with the intention of selling them at a higher price, or otherwise extracting rent – is not investment, it’s speculation!

    The investment was done by whichever entity financed the flats’ construction in the first place, i.e. Spanish public institutions.

    So could we please stop to conflate (public) investors and (private) speculators?

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