Wednesday, May 10, 2006

Spain's ENRON?

Zapatero's government is facing yet another crisis in Spain. The Popular Party has been lambasting the government over its handling of the Bolivian natural gas crisis.

Now they have a local crisis that could affect 350,000 Spainards. It seems there are two firms in Spain that have been enticing customers to invest their money in rare collectibles, mainly stamps. Betting the value of the stamps will always go up, hence the investors' investment also gaining value. It seems the house of cards has collapsed as nine senior members of Forum Filatelico and Afinsa have been arrested and the offices of the companies have been sealed.

Damage control is already happening as the Bank of Spain stands accused of not stepping in. Their response has been "We enforce the law, not write it." Meanwhile a former regulator reports the Bank of Spain knew of the stamp scheme but did not intervene because it was a political hot potato.

Zapatero is calling on the people of Spain to stay calm but whether he will be heeded is another matter. Afterall many people sank their life savings into these investments while rumours are already swirling in the media about 10 million Euro being found behind a false wall. While there are accusations the whole arrest against the stamp trading companies was timed to deflect blame from a government crisis about illegal arrests.

Stay tuned.

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