Tens of thousands of Spaniards are losing their life savings because of banking trickery. At the beginning of the crisis, banks that needed capital to cover loans gone bad convinced their customers to convert savings accounts into complicated securities, touting higher interest rates and the option to resell at any point. About 22 billion euros in bonds were bought this way—bonds that are now virtually worthless because of Spain’s economic crisis.Angry customers are protesting to get their money back, says the WSJ:
Eugenio Nuñez Cobás stormed into a bank branch in this coastal town one morning in August with three dozen fellow customers yelling “Thieves! Thieves! Thieves!” Then they returned to the street and pelted the facade with eggs, forcing the branch to close for the day.Mr. Nuñez had been coming to the Novagalicia Banco SA branch for eight months with a placard that reads: “I have all my savings trapped in Novagalicia Banco until the year 2999.” The 70-year-old retiree said: “I really should be at home playing with my grandchildren. Instead, I’m here every week, fighting for my savings.”
Some banks, such as Novagalicia, have entered into arbitration with customers and have given back funds. But while a few account holders have recovered their savings, many more have not, and the debacle has eroded trust in Spanish banks as a whole. Throw that into an economy where pensions and salaries are being cut back, where regional governments are unable to pay their bills, and unemployment continues to soar. It’s not surprising that Spanish bonds today saw yet another ratings cut, as S&P reduced Spanish debt to one level above junk.Not since World War Two has a great economy been as mismanaged as badly as the EU has fouled up the eurozone. For the hundreds of thousands of Europeans who have lost their jobs and life savings, the consequences of that mismanagement are very real. Is the answer to this catastrophe really “more Europe?” Do the authorities in Brussels really need more power — or deserve more public trust?That is the argument that Europe’s mainstream leaders are making these days. It will be interesting to see how this all pans out.