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Where is my Light Cycle?

One of the interesting exhibits in the pantheon of attempted explanations for the current financial crisis is the Kingdom of Spain. Spain had a massive real estate driven asset bubble, which has since collapsed. There is high unemployment, horrible public sector budget deficits, and lots of abandoned, half built housing projects around the coast. (In January, I struck up a conversation with some Australian engineers at the next table in a restaurant at lunchtime in the business district of Hanoi. Upon asking them how business was, they told me that there are lots of construction projects going on, but they were being undercut on price by Spanish and Italian companies. When domestic demand collapses, you look elsewhere).

And yet, Spain has not had a financial crisis. Spain’s banks are generally solvent and in good shape. One explanation of this is that financial crises in other economies are more a symptom of the economic crisis rather than its cause. Asset bubbles end badly. Government overspending has consequences.

One of Spain’s banks, Grupo Santander, has been expanding steadily throughout the world for a little over a decade. Unlike certain other banks of an expansionary nature (Royal Bank of Scotland, cough), Santander did not combine the acquisition of foreign banks with stupid lending, and so when the global banking sector fell in a heap a couple of years ago, Santander did what sound companies often do, and went looking for cheap assets. These included the small UK bank Alliance and Leicester, and the branch network and savings business of Bradford and Bingley (after its toxic assets had been nationalised by the UK government). Santander was an attractive buyer from the perspective of the UK government, as its expansionary frame of mind meant that it was unlikely to close branches and shed lots of employees.

My general inclination here is to compliment the management on running a good business. However, there is something disturbing, just the same. I have felt this for a while. Spanish financial institutions (and in truth Spanish organisations of all kinds) have a thing for building office complexes in the suburbs of Madrid that look like something out of a James Bond movie. It would be mean to say something about lingering residues of fascism here, so I will not do this.

However, the new headquarters (er, sorry, I mean the Ciudad Grupo Santander) shown in the above video really does appear to be a doosey. Professor Parkinson would no doubt have something to say here, but I feel oddly positive. However much I sometimes think that people who make corporate videos of this kind are best when placed on the B-Ark, being driven around by bright red Spanish banko-robots is certainly going to make marketing visits to foreign financial institutions a lot more fun. (Do they bring in Lewis Hamilton to race them on AGM day? Jokes about “augmented reality” in banking could go on and on, too).

It’s a shame that they have to build this sort of thing in Madrid, though. Building it (perhaps on an artificial island?) next to the private zoo in King Alfonso XIII’s weird coastal folly in the actual Ciudad (non-Grupo) Santander would be fitting, in some unexplainable way.

Link via Bruce Sterling.

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13 comments to Where is my Light Cycle?

  • The robot looks like a snail.

  • So, Michael, based on your agreement with Parkinson-Micklethwait Law of Showoff Before Downfall, are you saying the Santander Bank is on the brink of bankruptcy?

    And if not, are you prepared to admit that causation is a false one?

    On the subject @video: I like the building complex, the concept, the competence of industrial engineers – and I like the red robots. Even though it is hard to imagine actual experience or practicality from that video.

    And I could never understand people in innovative and fast-paced professions who sigh for heavyweight clumsy and unpractical pre-modern architecture.

  • Michael,

    Interesting but the word is ‘inexplicable’ not ‘unexplainable’.

  • Alice

    I confess to being a trailing edge of technology kind of person. But it will be a cold day in Spain before I get led around by a knee-high snail-shaped box, crawling around at a funereal pace. Especially when the alternative is to try out my Spanish on the first handsome young caballero who wanders by.

    So disappointing — the first shots made it look like you climbed in and got whisked around, Blade Runner style. Then reality intruded.

    Prediction — the robots will be retired within a year.

  • Rich Rostrom

    ISTR reading not long ago that Spanish banks had enormous bad-loan exposure in Latin America.

  • The adjective “inexplicable” is derived from the verb “explicate”, from the Latin explicatus meaning to unfold.

    On the other hand, “unexplainable” is derived from the verb “explain”, from the Latin explanare, meaning to smooth out.

    Treating “explicable” as the adjective form of “explain” is clearly incorrect – they are different words with different English etymology (it’s possible they are related in or before Latin, I suppose), which simply happen to sound reasonably similar and have very similar meanings. The unconjugated verb “explicate” is reasonably obscure, but my dictionary lists it as correct. “Explainable” and “unexplainable” aren’t especially obscure though – a quick Google search finds “unexplainable” to have about a quarter of as many instances as “inexplicable”

  • John B

    Hmmm . . .
    I’d rather they just gave me a decent return on my investment.

  • jmc

    Spanish banks got an exemption from Basel II rules that were forced on UK banks by the EU. In its simplest form Basel II was deeply pro-cyclic and UK banks were prevented from setting aside prudent reserves for the inevitable downturn.

    The bubble was just one of many we’ve have since the war and was created by several factors. But the collapse of the banking system when the bubble burst was caused by Basel II.

  • lucklucky

    It would be Alonso not Hamilton. Santander is Ferrari now, the Robots are Ferrari red and even have the Ferrari Symbol.

  • Paul Marks

    The house the King had built looks rather nice to me.

    On Basel II – it made a rotten system even worse (Spain was wise to stay out of it – but that may not save the Spanish banks over time).

    Spanish unemployment is no stange thing – it has some of the worst labour market laws on the planet.

    And, rather than replealing these regulations, the Spanish government has relied on spending money trying to create “Green jobs”.

    Yes the policy the leftists are now trying in the United States.

  • Laird

    I’m glad to see a few people here pointing to the real culprit for the worldwide banking collapse: Basel II. I have yet to see it mentioned anywhere in the regular media (including the usually-perspicacious Wall Street Journal). Unfortunately, 999 people out of 1,000 haven’t a clue what you’re talking about.

  • I’m mystified.

    Private-sector banks, like pretty much no other business on Earth, are focussed on maximising shareholder value.

    How does any of the stuff in the video, contribute to that end?

  • Paul Marks

    Mr Walker – of course it does not.

    However, (unless you are being ironic – although I am British I have a tin ear for irony and often do not recognise it) you are very innocent about the banks.

    For example, the Royal Bank of Scotland (which started insisting that people call it “RBS” – that was an early indication that somethign was wrong) left an handsome building in Edinburgh – to build itself a wildly expensive alien space station like H.Q.

    It is one of the “laws” of C. Northcote Parkinson – when a company (or anything) becomes obsessed with what its H.Q. looks like something is very wrong – and it is time to run away from it.

    “But Santi is not covered by Basil II” – true, but do not touch it with a barge pole (at least so the shade of Parkinson would advise).