Wednesday, December 07, 2016

Pontevedra Pensées: 7.12.16

Education in Spain doesn't usually get good reviews but the latest PISA global survey (2015) shows that the country is finally getting close to the 500 point average. Specific results were 493 for Sciences; 486 for Maths; and 496 for Reading Comprehension. These rose by 3, 2 and 8 points respectively. But there was a significant difference between the richer norh and the poorer south, with Castilla Y León getting 519 for Sciences, for example, against 473 for Andalucia. Overall, Spain features for the first time in the same group as the US, France, Russia, Norway and Sweden. All of whom are all a long way behind 'winner' Singapore, on 556 points.

Well, no one can say I didn't warn them . . . The new minister of Development, blaming the hiatus in government and the (suddenly discovered) difficulty of not just one but 5 particular stretches, has admitted there's not a snowball's chance in hell of the Madrid-Galicia AVE high-speed train being operative by the end of 2018. He's declined to give an alternative date but my suggestion is merely replacing the number 1 with a 2. That should do the trick and ensure no further let downs, even if it means the thing being 20 years late.

Yesterday was The Day of the Constitution and the 'far-Left' Podemos party boycotted the celebrations in Madrid. Personally, I find the concept of such a day rather quaint but, on the other hand, it seem churlishly adolescent for parties to behave thus. Gesture politics, I guess. But gestures are always more important to the Left than to the Right. Something to do with purity, I think. Hence the virtue-signalling. Of which students are rather fond, of course. 

The mayor of Pontevedra city of off to China soon, to receive the 5th international award for the improvements he's presided over for 'pedestrians and cyclists'. I wonder if any of the promotional videos show the latter weaving dangerously in and out of the former. I rather doubt it.

The city's town hall is bedecked with a banner similar to the one in Veggie Square I posted last week:-


It stresses that the city is not a place for macho violence but I don't know what the significance is of Pontevedra being 'in black'. Perhaps mourning for the victims.

I'm writing this in the Parador created from the former Benedictine monastery of Santo Estevo, up near Ourense. This must be one of the finest in this government-owned hotel chain. And the 3-chloistered monastery is quite magnificent. Here's a view as I arrived at 3.45 yesterday:-


Ironically(?) this is a pretty God-forsaken place now but must have been exceptionally so when it was founded in the 6th century. Access can only really have been from the river Sil, the valley of which can be seen in the background.

And here's a couple of the cloisters last night:-




More fotos tomorrow. Very well worth a visit.

Postscript; I had thought that this monastery might have been the one feature in Graham Greene's novel Monsieur Quijote but, in fact, this was the one in Oseira. My next stop.

Tuesday, December 06, 2016

Pontevedra Pensées: 6.12.16

This is a very Spanish week. With public holidays on both Tuesday and Thursday, we have puente holidays on both Monday and Friday. In other words, some lucky folk will only work on Wednesday. Perhaps. Reader Sierra has advised that such 2-puente weeks are known as viaductos. He/she has also given us un puenteing, which might or not be his/her invention. This is to take off the intervening work day but is not to be confused with un puenting. Which is jumping off a bridge, or bungee jumping.

I see from a chit from my bank that the Tax Office (Hacienda) have taken out of my account the charge I appealed against back in September, without ever responding to my letter. Not much chance of success, then. Así son las cosas.

The government says that all AVE high-speed trains will have wifi from sometime next year. So, it's good to know that, as and when the highly-delayed Madrid-Galicia line is finally operative, we won't have to do without this. Meanwhile, the number of problems both at home and in my regular bar with wifi over the last 3 days suggests that few people are working this week in Movistar(Telefónica).

Someone senior in the EU has said there's no need to panic about events in Italy because the EU emerges stronger from every crisis. Really??

As with that other doleful idol, Leonard Cohen, I've never taken to the singing of Bob Dylan. Nor to his personality. So, I had no difficulty in agreeing with this podcast on his churlish behaviour vis-a-vis the Nobel Prize committee.

Finally . . . Inspired by a BBC podcast, I'm re-reading Robinson Crusoe on my kindle. Last night, I was looking at the illustrations in the copy I got as a child and noticed that the following longish section was missing from it. As it endorses moral relativism, I'm assuming it was expurgated on religious grounds, as inappropriate for Christian kids. Even more interesting is the vicious harangue – penned in 1718 - against the Spanish for their atrocities in South America. Compared with cannibalistic savages, they don't emerge too well - for having offended against their own moral/religious principles. But even more noteworthy, perhaps, is the acceptance of prisoner-killing as normal practice in 18th century Christian warfare.

As long as I kept my daily tour to the hill, to look out, so long also I kept up the vigour of my design, and my spirits seemed to be all the while in a suitable frame for so outrageous an execution as the killing twenty or thirty naked savages, for an offence which I had not at all entered into any discussion of in my thoughts, any farther than my passions were at first fired by the horror I conceived at the unnatural custom of the people of that country, who, it seems, had been suffered by Providence, in His wise disposition of the world, to have no other guide than that of their own abominable and vitiated passions; and consequently were left, and perhaps had been so for some ages, to act such horrid things, and receive such dreadful customs, as nothing but nature, entirely abandoned by Heaven, and actuated by some hellish degeneracy, could have run them into.  But now my opinion of the action itself began to alter; and I began, with cooler and calmer thoughts, to consider what I was going to engage in; what authority or call I had to pretend to be judge and executioner upon these men as criminals, whom Heaven had thought fit for so many ages to suffer unpunished to go on, and to be as it were the executioners of His judgments one upon another; how far these people were offenders against me, and what right I had to engage in the quarrel of that blood which they shed promiscuously upon one another.  I debated this very often with myself thus: “How do I know what God Himself judges in this particular case?  It is certain these people do not commit this as a crime; it is not against their own consciences reproving, or their light reproaching them; they do not know it to be an offence, and then commit it in defiance of divine justice, as we do in almost all the sins we commit.  They think it no more a crime to kill a captive taken in war than we do to kill an ox; or to eat human flesh than we do to eat mutton.”

When I considered this a little, it followed necessarily that I was certainly in the wrong; that these people were not murderers, in the sense that I had before condemned them in my thoughts, any more than those Christians were murderers who often put to death the prisoners taken in battle; or more frequently, upon many occasions, put whole troops of men to the sword, without giving quarter, though they threw down their arms and submitted.  In the next place, it occurred to me that although the usage they gave one another was thus brutish and inhuman, yet it was really nothing to me: these people had done me no injury: that if they attempted, or I saw it necessary, for my immediate preservation, to fall upon them, something might be said for it: but that I was yet out of their power, and they really had no knowledge of me, and consequently no design upon me; and therefore it could not be just for me to fall upon them; that this would justify the conduct of the Spaniards in all their barbarities practised in America, where they destroyed millions of these people; who, however they were idolators and barbarians, and had several bloody and barbarous rites in their customs, such as sacrificing human bodies to their idols, were yet, as to the Spaniards, very innocent people; and that the rooting them out of the country is spoken of with the utmost abhorrence and detestation by even the Spaniards themselves at this time, and by all other Christian nations of Europe, as a mere butchery, a bloody and unnatural piece of cruelty, unjustifiable either to God or man; and for which the very name of a Spaniard is reckoned to be frightful and terrible, to all people of humanity or of Christian compassion; as if the kingdom of Spain were particularly eminent for the produce of a race of men who were without principles of tenderness, or the common bowels of pity to the miserable, which is reckoned to be a mark of generous temper in the mind.

These considerations really put me to a pause, and to a kind of a full stop; and I began by little and little to be off my design, and to conclude I had taken wrong measures in my resolution to attack the savages; and that it was not my business to meddle with them, unless they first attacked me; and this it was my business, if possible, to prevent: but that, if I were discovered and attacked by them, I knew my duty.  On the other hand, I argued with myself that this really was the way not to deliver myself, but entirely to ruin and destroy myself; for unless I was sure to kill every one that not only should be on shore at that time, but that should ever come on shore afterwards, if but one of them escaped to tell their country-people what had happened, they would come over again by thousands to revenge the death of their fellows, and I should only bring upon myself a certain destruction, which, at present, I had no manner of occasion for.  Upon the whole, I concluded that I ought, neither in principle nor in policy, one way or other, to concern myself in this affair: that my business was, by all possible means to conceal myself from them, and not to leave the least sign for them to guess by that there were any living creatures upon the island—I mean of human shape. 

Religion joined in with this prudential resolution; and I was convinced now, many ways, that I was perfectly out of my duty when I was laying all my bloody schemes for the destruction of innocent creatures—I mean innocent as to me.  As to the crimes they were guilty of towards one another, I had nothing to do with them; they were national, and I ought to leave them to the justice of God, who is the Governor of nations, and knows how, by national punishments, to make a just retribution for national offences, and to bring public judgments upon those who offend in a public manner, by such ways as best please Him.  This appeared so clear to me now, that nothing was a greater satisfaction to me than that I had not been suffered to do a thing which I now saw so much reason to believe would have been no less a sin than that of wilful murder if I had committed it; and I gave most humble thanks on my knees to God, that He had thus delivered me from blood-guiltiness; beseeching Him to grant me the protection of His providence, that I might not fall into the hands of the barbarians, or that I might not lay my hands upon them, unless I had a more clear call from Heaven to do it, in defence of my own life.

On a lighter note . . . Someone clearly didn't find this sign totally authoritative:-

Monday, December 05, 2016

Pontevedra Pensées: 5.12.16

Our local supermarket was open yesterday, a Sunday. This is a very rare event and I suspect it means it'll be closed today, during what the Spanish call un puente, a 'bridge' - the extra day taken off when a public holiday falls on a Thursday or a Tuesday. In other words, the intervening Friday or Monday, respectively. I should stress I'm talking about my barrio of Poio only. Across the bridge in Pontevedra city, the situation could be very different.

Regular readers will know why I loved this paragraph in a local paper yesterday: We can't deny it; roundabouts are a weak point for the majority of drivers. In fact, 2 out of 3 of us still don't know who has priority on them, making for unnecessary danger. 

If you really want to know the details of the 5 different foundational laws on education in Spain since 1970 - and if you can at least read Spanish - see this useful article in yesterday's Voz de Galicia.

The President of the Galician government - the Xunta - has had a salary increase of 7.5%, taking it to €72,000 a year. Which must have gone down well with all those whose income hasn't increased in several years. Not to mention those on a salary below the legal minimum. And the very many unemployed. 

Talking of salaries  . . . One of the oddities of Spanish life is that they're normally quoted on a monthly basis. And, even if you're sure they're pre-tax, you never know whether the amount is received 12 times a year or 13, 14 or even 15. Comparing annual gross salaries is, thus, rather difficult. Another oddity is that Spanish measurements of blood pressure come as, for example, 14/10 and not, say, 138/97. And then there's the university entrance marks, which are given out of 14. It used to be out of 10 but someone clearly thought this wasn't unusual or confusing enough.

It's all going one way in the EU, isn't it?, as events do their best to prove the accuracy of my long-standing prediction that the institution will eventually collapse under the weight of its internal incongruities. A day or so ago, we had the German Finance Minister instructing Greece to shape up or ship out of the eurozone; and now we have yesterday's negative referendum result in Italy. Which places yet another huge question mark over the whole EU shooting match. Here's Don Quijones on the latter development. As he puts it: All bets on Italy’s political, economic, and financial stability are, once again, off. And by extension, the stability – what remains of it – of the Eurozone. If it wasn't so serious, I'd do a bit of gloating. 

Anyway, there's an interesting article at the end of this post on why the EU is - and always has been - wrong for Europe.

Finally . . . Today's cartoon:-


Europe’s divisions have driven our success:  Matt Ridley, The Times

The Italian referendum and close-shave Austrian election are symptoms of a continent that may be teetering on the brink of political disintegration. It’s just possible that an empire may be collapsing before our eyes, as the Habsburg and Ottoman empires did before it, in or around the same neighbourhood.

With the rise of nationalist parties in Italy, Austria, Hungary, Poland, the Netherlands, France, Germany and Britain, the possibility that the Brussels union has fomented, rather than suppressed, nationalism can no longer be dismissed. The Habsburg empire, which also tried to make a whole out of linguistically and culturally diverse parts, and ended in a war sparked by Serbian nationalism, is an unhappy precedent. The European Union may be encouraging precisely what it was founded to avert.
True, it is an empire without a hereditary emperor, founded on high ideals of peace and prosperity. But at least initially, Napoleon’s empire was also founded on the principle of replacing old regimes with a more meritocratic and modern system.

Against this background, it is worth recalling that the leading theory among economic historians for why Europe after 1400 became the wealthiest and most innovative continent is political fragmentation. Precisely because it was not unified, Europe became a laboratory for different ways of governing, enabling the discovery of regimes that allowed free markets and invention to flourish, first in northern Italy and some parts of Germany, then the low countries, then Britain. By contrast, China’s unity under one ruler prevented such experimentation.

It is generally assumed that it was Charles, Baron Montesquieu who first articulated this theory, in De L’Esprit Des Lois (1748). In contrast to the great empires of Asia, he remarked, Europe’s “many medium-sized states” had incubated “a genius for liberty, which makes it very difficult to subjugate each part and to put it under a foreign force other than by laws and by what is useful to its commerce”.

I think David Hume got there first, however. In his 1742 essay Of the Rise and Progress of the Arts and Sciences, he mused on why China’s “considerable stock of politeness and science” had not ripened, and blamed the fact that it was one vast empire, so “the authority of any teacher, such as Confucius, was propagated easily from one corner of the empire to the other. None had courage to resist the torrent of popular opinion.” By contrast, Europe is the continent “most broken by seas, rivers, and mountains” and so “the divisions into small states are favourable to learning, by stopping the progress of authority as well as that of power”.

Whoever first thought of it, the idea has gained almost universal agreement among historians that a disunited Europe, while frequently wracked by war, was also prone to innovation and liberty — thanks to the ability of innovators and skilled craftsmen to cross borders in search of more congenial regimes.

In The European Miracle (1981), Eric Jones claimed that “Against the economies of scale that large empires could offer, the decentralisation of Europe’s states-system offered flexibility and a family of experiments in government decision-making”. Since then, the historians Nathan Rosenberg, Paul Kennedy, Jared Diamond and Joel Mokyr have all echoed the same point in books. Mokyr, in a 2007 essay, pointed out that Paracelsus, Comenius, Descartes, Hobbes and Bayle “survived through strategic moves across national boundaries”. He could have added Gutenberg, Columbus, Papin, Voltaire and more to his list.

In the early 18th century an ambitious chemist and would-be alchemist named Johann Friedrich Böttger showed up at the court of Augustus the Strong, elector of Saxony, claiming to have discovered how to make gold. He was promptly imprisoned in a castle by the prince lest he move on and offer his technology to a rival ruler — thus illustrating Hume’s point. Böttger did not of course know how to make gold, but he did work out how to make fine porcelain to rival China’s. The castle was called Meissen.

During the 18th century, Britain experimented with a light tax burden compared with the Dutch Republic. Dutch businessmen moved to Britain in large numbers, bringing with them their technologies and ideas. In China, they could not have escaped uniform taxes, at whatever level they were. The differential between the Dutch Republic and England narrowed, suggesting that the Dutch authorities were trying to hold taxation back to slow the exodus.

In other words, free movement of genius was crucial to Europe’s success. Perhaps equally important was the free movement of skilled artisans. Jones noted that “the Murano glassmakers spread their arts across Europe despite severe penalties threatened by the Venetian authorities”. But there was a crucial difference from what the European Union means by free movement of people today. These people were moving not because the rules were the same everywhere, but because they were different. The European Commission’s obsession with harmonisation prevents the very pattern of experimentation that encourages innovation.

Whereas the states system positively encouraged governments to be moderate in political, religious and fiscal terms or lose their talent, the commission detests jurisdictional competition, in taxes and regulations. The larger the empire, the less brake there is on governmental excess.

So, an ambitious genetic engineer, who has devised a way in the laboratory to suppress agricultural pests and eradicate disease-carrying mosquitoes, by releasing genetically modified males that cause infertility among their offspring, has nowhere to go within the EU to find a regime that will license his experiment in the wild. Like Columbus leaving Genoa for Spain, he goes to the United States instead, eventually selling his British-born business to an American company that can afford to build a GM-mosquito factory in Brazil to combat the zika and dengue viruses. This is a real example: the company is called Oxitec.

In effect, the European continent is saying to innovative thinkers the opposite of what it said for centuries. Where once it signalled that they could exile themselves and take their ideas with them to sow in more fertile ground, now it is saying: it does not matter how far you move within Europe, we want to be sure you can never escape the same rules. With east-west and north-south differences within the EU building, that feels increasingly like a tension that must break in the years ahead.

Sunday, December 04, 2016

Pontevedra Pensées: 4.12.16

SPANISH CULTURE: Prospering in Spain: I've drafted a guide on enjoying - well, at least happily surviving - life in Spain. One day, I'll post it here - when my Spanish and expat friends have mauled it - but anyone who wants to see (and comment on) a copy of the latest draft can contact me here. Yes, one of the world's shortest email addresses.

THE EU: Referendums: President Wancker says these are a very bad thing. Well, in the immortal words of, Mandy Rice-Davies (sadly, no relation): He would, wouldn't he? The Times todays says that Brussels is fiddling while Rome burns. Which has the ring of truth about it. In all senses of the word 'fiddles'.

THE UK 1: If you live there, you might want to read the article at the end of this post. It's by that old cynic Christopher Booker and it's about UK energy policy and its implications for your life and your bank account.

THE UK 2: Exactly 65 years ago - and 3 years before it happened in the USA - a British company - Lyons - began operating a computer in its business, using a machine called the Lyons Electronic Office. Or LEO. A global first, of course.

ITALY: Those Banks Again: Agent provocateur, Don Quijones, avers sarcastically that: Banks cannot be allowed, at any cost, to suffer the consequences of their own mismanagement, or worse. The EU fix for the dreadful situation in Italy is already in place, he says. See here for details of how taxpayers and small-time investors will be fleeced. Again. In contravention of EU laws. Again. And the Brussels technocrats wonder why respect is in freefall. Or perhaps they don't.

CUBA: Post Mortem: According to the latest dictator there, Fidel Castro's dying wish was that there be no personality cult after his death. Bit late for that, mate. Your entire life was dedicated to yours. I doubt it'll make any difference there won't be a statue of you in Havana. Allegedly.

GALICIA: Wasps: You think you have a problem with a nest in your house or shed? Not really. This is what a real problem looks like.

FINALLY: The Staff of Life: I had a large curry lunch yesterday for friends from Galicia, Australia and Poland. Knowing how important it is for Spaniards to have their comfort blanket of bread, I asked my Galician friends to bring some. They arrived with 3 of these lovely large baguettes:-


As ever, little of the stuff was actually eaten and so, having thrown out all the bits left on the table, I still have one and a half barras in my kitchen. For the birds, I guess.

THE GALLERY


ARTICLE

On energy policy, our politicians are leading us into darkness: Christopher Booker

As the costliest project any British government has ever proposed, the HS2 rail scheme has rightly drawn heavy criticism from those asking why we are to spend £56 billion on a venture which promises such puny benefits. But most people remain strangely oblivious to a far greater cost to which the Government has committed us, for a purpose even more demonstrably futile.

What should be making front page news is the story revealed by the latest figures from the Office for Budgetary Responsibility (OBR), predicting the soaring cost over the next six years of all the “environmental levies” imposed on us under the Climate Change Act. Between now and 2022, according to the OBR, these will amount to £65 billion, of which £36 billion will be subsidies we shall all be paying through the “renewables obligation”, mainly to the owners of our ever-growing number of windfarms.

These subsidies alone will represent a near-trebling of what we are already paying through our electricity bills, which by 2022 the OBR predicts will have risen to nearly £7 billion a year.

But on top of this, under yet another “green levy”, many of us will also be contributing over the same period a further £21 billion in Air Passenger Duty, which already adds up to £150 to the cost of any airline ticket bought in the UK.  Still further, we are all to be made, at an estimated cost of £15 billion, to install “smart meters”, which experts claim are so badly designed that they will give us no benefit whatever.

So all this will fleece us of around £100 billion, nearly twice the cost of HS2. But the other, even more terrifying part of the story is what we are to get for all this mind-boggling expenditure, as the only country in the world committed by law to cut 80 percent of our CO2 emissions by 2050. 

Even today, few have yet grasped the Government’s intention that, within 12 years, we shall be taking a further giant step towards eliminating much of our use of fossil fuels. We shall be forced to replace almost all our use of gas for cooking and heating with electricity, and most of our cars and other transport will also have to be powered by electricity too.

So where is all this power to come from, if not from the fossil fuels, coal, gas and oil, which still currently supply more than half our electricity and more than 80 percent of all our energy?  The Government’s answer is that most of it will be provided either by “renewables”, such as the wind and the sun, so intermittent that they can on occasion supply barely one percent of the electricity we need, or by new nuclear power stations, such as that proposed at Hinkley Point, which on current showing may never even be built.

Even during our recent freeze, with electricity demand rising to peak levels and half the power we can import from France disabled by storm damage, we were only keeping our lights on and our computer-dependent economy running with the aid of the few coal-fired power stations we still have left. We were told we were already in the “danger zone” of running out of power.  How timely that I was last week sent a leaflet from my own power distribution company asking: “Are you prepared for power cuts?” 

We are sleep-walking towards what threatens to be the greatest self-inflicted disaster this country has ever faced. And the astonishing thing is that the last people to be aware of what is going on are those politicians who have brought this about. Their brains are so addled by groupthink about climate change that, even when the lights do go out, they will still have no idea that it was entirely their own blind stupidity, which made such a catastrophe inevitable. 

Saturday, December 03, 2016

Pontevedra Pensées: 3.12.16

SPANISH LIFE/CULTURE

Valencia's Fallas: I really must get to see these someday soon. Meanwhile UNESCO has placed them on its list of items of Intangible Cultural Heritage of Humanity. See here in El Pais, in Spanish, and here in English.

Talking of big attractions . . .

The Next EuroDisney?: As you might recall, a few years ago there was proposal to build a vast pleasure complex outside Madrid. It came to nothing but now we have another one, planned for Torres de la Alameda, near Alcalá de Henares. El País provides details here, in English. I heard the local mayor on the radio yesterday, naturally sounding happy and optimistic. Possibly because he anticipates a sizeable increase in his net worth.

About to Give Birth Here?: If so, this is what The Local thinks you need to know. Good luck, by the way.

TV: Finland, Denmark and Sweden are the EU countries where viewers are most likely to trust the news they get from the box. In Greece it's only 16% but Spain manages 31%. Rather more surprising is that France is at only 41%. 

SPANISH POLITICS

The Pension Fund: As elsewhere, Spain has a Reserve Fund for this, though possibly not for much longer. Its latest dip into it is for purposes of Xmas bonuses to lucky pensioners. Pessimists predict the fund could be exhausted within a year. Economists probably differ on the significance of this.

THE SPANISH ECONOMY

Unemployment: The bad news is that this rose in November, for the first time in 3 years. The good news is that the government has promised to create 1.4m jobs during the next 3 years. Though El País seems more than a tad sceptical here, in Spanish.

The Minimum Wage: There's possibly more grounds for optimism that, under pressure from the opposition parties, the PP minority government will deliver on a commitment to give this a considerable hike. At least for those workers to whom this applies.

Banks: Amidst all the fears about Italian banks, Spain's problems have rather dropped out of sight. But the Wall Street Journal has redressed the situation in an article either here or at the end of this post on my own (current) bank, Banco Popular/Pastor

THE EU

Italexit?: Big day tomorrow, when we find out if the Italian prime minister will resign or not. And, if he does, whether this will take Spain down a road some see as inevitable - to the sunny uplands outside the EU. Interesting times indeed.

LOCAL STUFF

Wine Tours: I had a wonderful lunch in Vigo yesterday, with two lovely young women. The albariño and godello white wines flowed freely and, as a result, we decided to set up a company offering tours of the region's numerous wine bodegas. Anyone with in-principle interest can contact me here and sign up for the initial - heavily discounted - tour. You never know. It might well happen. The offer, by the way, is not open to anyone called Mittington.

THE GALLERY


FINALLY

Castellano: More than once over the years I've admitted to being unfamiliar with the 2nd person plural of Spanish verbs - essentially because I very rarely address more than one person. This was brought home to me yesterday when I invented comparteis for the present tense of compartir. Which is really compartís. And then I had to check later with venir and subir. To find venís and subís, of course. Hope this helps someone.

ARTICLE

Banco Popular Faces Threat as Spain’s ‘Most Italian Bank’

Spain’s Banco Popular Español SA might be the test. Spain moved to clean up its banking system after a 2008 real-estate bust, but the Madrid-based bank is still struggling with around €32 billion ($33.8 billion) in bad loans and other nonperforming assets. Its stock price has collapsed. Its executive chairman is resisting calls to step down.

Italy’s constitutional referendum on Dec. 4, if it empowers euroskeptic parties, could sour investors on anemic banks across the Continent—not just in Italy. How Banco Popular and other weaklings handle the stress will test Europe’s efforts to gird its fragile financial system from contagion.

Like Italy’s banks, Banco Popular lent aggressively, with lax standards, and borrowers stopped repaying loans when recession hit. Unable to afford big losses, it bet that real-estate prices would rise enough to boost the value of its unfinished apartment complexes and empty plots. They haven’t.
Other major Spanish lenders that helped to fuel the country’s lending and building binge have been quicker to sell soured property assets at a loss and move on.

A spokesman for Banco Popular said it has accelerated property asset sales since 2012.

But investor concern about the bank, Spain’s No. 7 by market value, rose last month after it reported a second consecutive quarter of profit close to zero and delayed plans to create a “bad bank” unit to manage and accelerate the sale of delinquent property loans.

Ángel Ron, who has seen the bank’s market value decline 96% through Wednesday since becoming its chairman in 2004, is facing calls to step down, bankers and investors say. The bank spokesman said the board supports Mr. Ron.

Banco Popular, which analysts often call Spain’s “most Italian bank,” has raised €6.1 billion from investors since 2009 to appease concerns. The latest capital raise, a rights issue in May to boost provisions for loan losses, brought in €2.5 billion. Shares were offered to existing shareholders, many of whom are individual investors.

The share price has since plummeted 63% through Wednesday.

The bank’s spokesman said the capital raise was sufficient.

But institutional investors are divided about whether the fresh funds will put the bank on the path of its recovering Spanish banking competitors or keep it on the floundering track of its Italian peers.

Naysayers argue that the lender faces a dilemma: Its real-estate assets are of such poor quality that it would have to divert revenue toward more provisions to cover loan losses. Alternatively, it could sell some property assets at a loss. Either way, profits would take a hit.

“Popular’s balance-sheet cleanup continues to drag,” Berenberg Bank analyst Andrew Lowe wrote on Nov. 2. “Its capital position is again in doubt.”

Twenty-eight percent of Banco Popular’s loans and property assets on Sept. 30 were classified as nonperforming, compared with 15.5% for Spanish banks as a whole, S&P Global Ratings analysts said.

Investors with a more positive view say the new capital will boost coverage of Banco Popular’s nonperforming assets to 50%, although that is below that of peers. The bank said this month it would lay off 2,600 employees to cut costs.

Such moves make Banco Popular an appetizing takeover target, potentially by Spanish lenders Banco Santander SA or Banco Bilbao Vizcaya Argentaria SA, investors and bankers say.

But there are obstacles to a sale: Mr. Ron, the bank’s chairman, is reluctant to agree. And questions about how much more loan-loss provisions are needed cast doubt on its attractiveness to would-be suitors.

At least one potential buyer, Spain’s Banco de Sabadell SA, has walked away.


These are bits extracted from this article about other troubled European banks:

How Italian are Europe’s banks?

Other troubled banks are scattered around Europe. Portugal’s state-owned Caixa Geral de Depósitos SA recently received approval from the European Commission for a recapitalization plan to make headway on tackling bad loans.

Banco Comercial Português SA, which recently sold a 16.7% stake to China’s Fosun Industrial Holdings Ltd., might also need to strengthen its capital levels, analysts say.

Investors and analysts expect Deutsche Bank AG will need more capital in coming months, although the German lender’s troubles are less about bad loans than about anticipated legal fines, a costly and difficult restructuring, and derivative holdings that complicate investors’ views of the bank’s riskiness. Deutsche Bank executives have said they have no immediate plans to raise capital.

Italy’s UniCredit SpA and Banca Monte dei Paschi di Siena SpA plan to recapitalize, in part by selling new shares after the referendum, to reassure investors.

But raising capital could be harder for Europe’s weak banks, analysts say, if Italian voters reject Prime Minister Matteo Renzi ’s proposed constitutional changes. A defeat for Mr. Renzi could force an early parliamentary election and strengthen the 5 Star Movement, which questions the benefits of the euro currency. That, on the heels of Britons’ vote to quit the European Union, would heighten uncertainty about the strength of the union, weighing on regional investment and growth.

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