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Thursday, September 25, 2008

Bank in Spain Offers Free Car or Motorcycle to Get Deposits

Well, I’m speechless…

Free car gambit to lure depositors: “A Spanish bank is offering its customers cars free of charge in exchange for opening long-term, interest-free deposits.

Banesto, a mid-sized lender controlled by Santander, Spain's largest bank, is offering savers Citroën cars or Piaggio motor scooters in lieu of interest payments under a promotion called Sobre Ruedas, which translates as "smooth running".

Banks routinely offer customers opening new deposits small gifts like pens, although Banesto has in the past given clients computers and flat-screen televisions. The lastest offer, however, marks the bank's biggest product giveaway to date.

Banesto does not pay interest on depositors' capital during the lock-in period of the offer, and those customers who do take it up pay tax as if the vehicle's value were interest.

The gambit highlights the tough times both banks and the car industry are facing in Spain as the country weathers a sharp economic downturn.

Spanish lenders have been particularly hard hit by the seizing up of wholesale funding markets, which many had grown dependent on to finance their ballooning mortgage portfolios. The credit squeeze has exacerbated a downturn in the housing market, which is virtually at a standstill.”

Ok, almost speechless.

For Banco Benesto click here.

I’ll translate the Spanish for you all. (I used to live in Argentina for four years.)

“Deposit on Wheels”
“Get a car or a motorcycle”
“Without withdrawals”

Don’t be surprised. Spain probably had THE largest real estate and debt bubble in the world.

Ghot Towns? In Spain? was one of my first posts on this blog in July 2007. I’ve warned that Spain would absolutely collapse in many posts. In More Ghost Towns, I pointed out that the ‘Ghost Town’ phenomenon had started to appear in the U.S. I went into more detail in Slow Motion Howsing Crash: UK, Spain:

“The Spanish economy tripled on wild speculation in real estate as cheap money from the ECB flooded the country. Upon joining the ECB, interest rates in Spain dropped. More importantly, real rates turned negative. That of course made this BUBBLE INEVITABLE. Only a SUCKER didn’t borrow madly. The smart money is of course long gone, leaving behind only the bagholders.

If the economy tripled, and a good chunk of it was on wild real estate speculation, how much of that 1.1 trillion Euros will turn out to be nothing but the ILLUSION OF PROSPERITY?

Hint: In Japan real estate AND equity prices dropped by 90% over 15 years after their shockingly similar bubble burst.”

In The Other Bigger Shoe: The Rest of the World I argued: “The other BIGGER shoe is finally dropping: The REST of the world is weakening rapidly.”

Since then Pakistan: Has Dumbest Idea, Sets Floor for Stocks and India: Also Had Dumbest Idea, No More Commodity Futures. Russia: One of the BRIC’s Just Bricked. After back to back drops in excess of 15% each, Russia: Smashed Again, Halted Indefinately.

Last but not least Borat, the famed journalist from Kazakhstan, says, “Very nice. Is good.”

Yes it IS true, Kazakhstan Plans Paulson Style Bailout.


Anonymous said...

So you had to got to CR for some crossover traffic. Dude, i hit you 3 or 4 times a day, you brought me the Hindenburg.

So do you figure we have many more of those -400 days before the BIG crash? I just wonder if they will let a big one run, or if the new interventionism will pull the breakers 'for the good of the nation'. Then the witch hunt will really start, and we can blame..... CANADA!

Charles Butler said...

Ben, I think you're underestimating the possibility that this program was instigated by Citroen, and not Banesto.

Anonymous said...

I think India did very well in stopping commodities future trading, the rate with which inflation was rising their was no alternate solution; although it sounds influence politically but it was required.

Ben Bittrolff said...


No disrespect, but that is NOT how inflation works or how it is created.

All India has accomplished is to HIDE inflation AND smash the economy. It will take a while, but the damage has been done and growth rates will stall out.

When India starts experiencing product shortages in the commodities that are no longer 'tradeable' come and see me so I can say, "Told you so!"

Anonymous said...

"Ghot Towns? In Spain? was one of my first posts on this blog in July 2007. I’ve warned that Spain would absolutely collapse in many posts. In More Ghost Towns, I pointed out that the ‘Ghost Town’ phenomenon had started to appear in the U.S. I went into more detail in Slow Motion Howsing Crash: UK, Spain:"

I take it you've done a spelling course since July 2007 too :)


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