Is it possible that April and May have worsened the trend? There is more here.
The run on Spanish banks
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I’m a bit confused about the semantics: Does a negative percent mean “less deposits than last quarter” or withdrawals?
Y-axes SHALL NOT be labeled!!!
It doesn’t have to be an increase in withdrawals(It probably is). A negative percent does mean less total deposits than the prior quarter. That’s what the Q/Q means. Quarter over quarter. Not indexed to a base year.
I think the Spanish data is biased by a tax change that took place in 3Q2011. Spain increased the tax on interest paid on CDs, causing a shift to short-term bank-guaranteed bonds that are issued at a discount to par and don´t pay interest (pagarés). To the extent this is happening, funds are not leaving the Spanish banking system, and I suspect may be distorting the deposits data. Of course, these pagarés are not guaranteed by deposit insurance, so the holder doesn´t have the same credit security.
If all the deposits are going to Germany is there any way to induce more cross border lending? I know I know that is what got them in a lot of trouble in the first place, but if the deposits are all in Euros and the loans are all in Euros why isn’t the bank in Germany just as good as the bank in Spain? The common, European wide, resolution and regulatory regime is whatever German authorities want since the banks with the money are in Germany and the Spainish banks shrivel up. Certainly the German banks haven’t shown great instincts with cross border lending before, but surey they can do better on that score. Export some of their expertise building relationships with domestic industries rather than just exporting the capital.
Is it a bank run or are Spanish people just running out of money?
Is it a bank run or are Spanish people just running out of money?
The pain in Spain is only beginning…
http://bubblesandbusts.blogspot.com/2012/04/pain-in-spain-is-only-beginning.html
The pain in Spain is mainly in the main. Add me to the queue when I go to Greece before the June 17 elections to withdraw my meager worldly possessions in Greek bank euros before the clock strikes midnight and I turn into a drachma! The bank jog has begun. I would use my ATM card but the amount is too big to withdraw in $300 increments. LOL what power Greece and Spain have over the world…or so people think. Like with Dr. Evil, the world is their oyster!
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