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Spain's youth asks: Why is there money for banks and not for us?

By Julio Embid, Special to CNN
updated 6:54 AM EDT, Tue June 5, 2012
Young Spainish people protest during a national strike in Madrid on March 29, 2012.
Young Spainish people protest during a national strike in Madrid on March 29, 2012.
STORY HIGHLIGHTS
  • Julio Embid: Spaniards want to know how much money Bankia needs
  • As Bankia sucks up financial aid Spaniards wait to hear news of welfare state cuts
  • People find it confusing that there is no money for healthcare, but enough to rescue banks
  • People will probably wait until summer is over to resume protests and strikes

Editor's note: Julio Embid is a political scientist and is a deputy director at the Laboratory of Fundación Alternativas.

(CNN) -- How big is the financial hole? This is the main question among Spaniards nowadays. They want to know how much money Bankia, the country's fourth-largest bank, needs.

Bankia was created in 2010, a result of the merger of seven small entities including Caja Madrid and Bancaja.

Such cajas -- regional savings banks with board members appointed by the local authorities -- devoted part of their profits to social purposes within their areas. They fell into enormous debt due to their investments in infrastructure, and thousands of houses which were never sold.

Bankia was a proposal of the ruling Popular Party (PP, conservatives). The idea was to merge the saving banks and give an executive role to Rodrigo Rato, the former managing director of the International Monetary Fund and first chairman of Bankia.

Before these posts, Rato was Minister of the Economy and Treasury in the first and second cabinet of Prime Minister Jose Maria Aznar, who led the country between 1996 and 2004.

Rato was idolized in the conservative media, and credited with the previous cycle of economic growth. All was running smoothly until May, when the current Minister of Economy, Luis de Guindos, forced Rato to resign as Bankia president while the CNMV (the Spanish agency for financial markets) suspended the stock exchange of Bankia when its price slumped to half its original value.

Spain: Too big to fail, too big to bail
Spain banking to blame for stock drop
Failing banks in Spain drag down economy
Bankia troubles put Spain on edge

Now, as Bankia sucks up financial aid, Spaniards wait to hear news of cuts to their welfare state.

Every Friday could be a Black Friday, because it's always Friday in Spain when cuts and bad news arrives at the cabinet meeting.

The government recently approved a €10 billion euro ($12 billion) cut in education and health programs, and will most likely announce it will spend €23 billion ($28 billion) to rescue Bankia.

So what do the people think?

According to the CIS, the public agency for surveys, Prime Minister Mariano Rajoy has gone from a rate of approval of 45% in January to 38% in May -- a significant drop considering he won the elections with an absolute majority only six months ago.

People, especially youth (for whom unemployment rates are above 51%), find it difficult to understand there is no money for healthcare or universities, but enough to go around when it comes to rescue banks or pay severance packages to bankers who have ruined their companies.

Up to now, no one has resigned empty handed.

But not everything is bad news for the government and its party. Their main competitor, the Socialist Party (PSOE, center-left), trails in the polls.

Although it has won two regional elections this Spring (Andalusia and Asturias), its leader Alfredo P. Rubalcaba generated "little" or "no" confidence among 78.8% of the Spaniards, according to the latest survey carried out by the CIS.

So what happens now? All the parties in opposition have asked the government to open an inquiry into the Bankia case. It is difficult to justify the billions in cost without knowing exactly what happened.

Meanwhile, summer is on the way. In Spain, this is the time when political life is paralyzed and tourism boosts job prospects, especially in the coastal towns.

Demonstrations, strikes and protests will probably be forgotten until September.

While transport prices and university fees rise, and the government increases taxes and lowers pensions, people prefer to stay at home and support La Roja (Spanish national soccer team) and wait until it is cooler to take the streets.

The opinions expressed in this commentary are solely those of Julio Embid.

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