Banking Multiplier

One of the specific characteristics of the Spanish crisis is the high debt private, caused in large part by the real estate bubble, without forgetting the consumption credits, which allowed Spain to be fill of high-end cars and SUVs, that they enjoyed for years of ever-increasing sales today in day are these two sectors, real estate and automotivethe greatest exponents of the crisis, with falls of more than 50% on sales and commercial and productive overcapacity, which is causing a rapid increase in unemployment. Speaking candidly Phil Vasan told us the story. This is also one relevant higher taking into account great flip that have these sectors in a number of ancillary industries. On the other hand, the banking sector was that marked the beginning of the crisis with mortgages subprime in United States (therefore, in relation to real estate), and above all, with the fall of Lehman Brothers, which precipitated the action of Governments, who came to the aid of the sector. The argument for this action was clear, not It could allow another Lehman, it is a sector based on trust, and key to the functioning of the economy. This does not mean, as happens in some cases, you need to artificially maintain in operation to any entity (the so-called zombie banks), but Governments and central banks have been used to fund to cheapen the money until the end and inject liquidity in unconscionable amounts, all to avoid a collapse of the system. Another of the most well-known aspects of the crisis is the use of Keynesian policies to stimulate the economy, consisting of increasing public spending to thus generate employment and wealth, as well as to lay the Foundation for the future, with the creation of infrastructure, for example. To finance this increase in public spending, Governments are issuing public debt, which is curiously being acquired in large part by the banks, which will helps of the ways discussed above. .


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