…back in 2008 and early 2009, Spanish regulators were riding high after their country’s banks seemed to have dodged the financial crisis with minimal losses. A big reason for their success, the regulators said, was an accounting technique called dynamic provisioning.
By this, they meant that Spain’s banks had set aside rainy- day loan-loss reserves on their books during boom years. The purpose, they said, was to build up a buffer in good times for use in bad times.
…Normally the rules say companies can record losses, or provisions, only when bad loans are specifically identified. Spanish regulators said they were trying to be countercyclical, so that any declines in lending and the broader economy would be less severe.
What’s now obvious is that Spain’s banks weren’t reporting all of their losses when they should have, dynamically or otherwise.
In virtually every nation, the crooks and sociopaths rise to the top of their respective financial systems. They manipulate, lie, cheat, skim, and steal as a matter of the ordinary course of business. Ultimately their behavior leads not only to their own destruction, but to ours as societies. The cycles have run throughout history. Our time has come. Don’t look back, lest you become a pillar of salt. Just keep walking.
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