By Don Quijones, Raging Bull-Shit .
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.By Don Quijones, Raging Bull-Shit
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