Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 12, 2012, Winnipeg, Manitoba C M Y K PAGE A11 P RESSURED by other EU governments, Spain has asked the EU for $ 156 billion in aid to bail out its banks. European leaders say this amount well exceeds what is needed, but they are miscalculating. As with Greece, the aid package is likely too little to permanently quell investor fears Spain's banks will collapse, and conditions imposed by Germany could make Spain's situation worse. Spain's predicament is wholly different from Greece and Italy - its government is hardly inclined to spend too much. Prior to the global financial crisis, Spain enjoyed a boom in tourism and home construction as richer northern Europeans sought vacations and second homes in its sunny climate. Robust construction and tourism drove growth and provided Madrid with adequate taxes. Unlike Rome and Athens, it enjoyed persistent budget surpluses. Foreigners invested in Spanish bank securities, and the latter financed a hotel and housing boom. In the wake of the financial crisis, loans defaulted and Spanish banks were stuck with non- performing real estate loans. Unlike the Federal Reserve in the United States, Spain's central bank cannot print money to mop up bad loans, and the European Central Bank is not empowered to bail out banks and impose reforms. Hence, Spain's national government had to borrow euros in international bond markets to save its banks. With real estate loans totaling more than $ 885 billion, or about 65 per cent of GDP, the cash that must be raised is simply beyond the borrowing capacity of the Spanish government The IMF estimates Spain's banks need $ 50 billion in new capital, and as much as $ 125 billion to write off bad loans. Moreover, as we have learned from the U. S. crisis, first estimates of losses are likely conservative - those numbers will grow. Madrid's borrowing costs may drop on announcement of the $ 157 billion package, but international capital markets will soon conclude it is too small, and Spain's government and banks will again face prohibitive borrowing rates. In addition, Germany and other northern creditor states would like to impose strict restructuring conditions on Spanish banks - prescribing mergers and restructuring and winding down the weakest banks. Outside meddling in this process could further weaken Spain's banks and economy by resulting in unnecessary absorption of its bank by Germans, Dutch and others financial institutions - forced sales could make Spanish banks targets of opportunity for bigger EU banks. Historically, Spain's banks have been well run and effectively regulated. Spain's current fix is much like Florida or Nevada after the big Wall Street banks inflated U. S. housing values by underwriting irresponsible mortgages through networks of unscrupulous mortgage brokers. Simply, Spain's resort industry, home values and banks are collateral damage of the wider global crisis and European recession. Indeed, the IMF, in a detailed report published on May 30, found the core of Spanish banking sound, regulation generally effective, and needed restructuring well underway. Spain does not run its banks the way Italy and Greece ran their national finances, and it doesn't need German meddling in its financial institutions. The IMF has noted the need for greater clarity for recapitalization strategies, bank restructuring timetables and certain improvements in bank oversight, but Spain is not running a looselyregulated Third World financial system. As Germany is the largest country donor to the bailout fund, its interests and reservations are understandable. However, it would be better to empower the ECB to back up the $ 157 billion bailout allocation, much as the Federal Reserve backed up the TARP, and for the ECB to oversee use of the funds and implementation of IMF recommendations. Peter Morici is an economist and professor at the Smith School of Business, University of Maryland. Shrouded in secrecy In his June 11 column ( C hildren's advocate off base), Dan Lett states that the biggest threat to the child welfare system is the public's lack of interest in child welfare. I disagree strongly with this statement. My heart breaks every time I hear or read of another death or injury to a child in the system. The death of Phoenix Sinclair was not a one- time event that we can brush off with a " well, it happens." She was a little girl who deserved something much better, as did Gage Guimond and Nathaniel Meeches - the list goes on. For the general public, it's simply impossible to find out what's going on until a tragedy occurs, and that is thanks only to the media. The system is shrouded in secrecy. Of course, this is designed to protect the children, and even the parents, to some extent, who may have severe difficulties themselves, but it's also designed to protect the anonymity of the workers, whose jobs never seem to be on the line for disastrous errors in judgment. MacDonald had stated that the social workers didn't kill Phoenix, but as a ward of the system, she was taken from a foster family where she was safe and loved, then disappeared from sight for nine months, only to re- emerge as a corpse. We need to know if someone was criminally negligent in making ( or not making) decisions that led to her death. Bring on that inquiry, because we want to know, so that it never happens again. SHARON COREY Winnipeg �� Kudos to Dan Lett for the insightful critique on Darlene MacDonald's " personal" comments regarding the Phoenix inquiry. I disagree, however, that MacDonald has no right to a personal opinion regarding this issue. What seems amiss is that if the Free Press deemed the advocate's comments personal and inappropriate, it went ahead and published them anyway. A question- and- answer session at the News Caf� would have provided both Lett and the public the opportunity to question MacDonald on her reason for the stance. We are now left to read between the lines. PRABHA MENON Winnipeg �� Children's advocate Darlene MacDonald believes that the caregivers and not the Child and Family Services social workers killed Phoenix Sinclair. MacDonald fails to recognize a fundamental truth: were it not for the actions of the social workers, Phoenix would not have been placed in a perilous and ultimately fatal situation. There are two tragedies here: the preventable death of little Phoenix and the inability of MacDonald to see the forest for the trees. WALTER MELNYK Winnipeg Higher in Regina In his June 7 letter, Gas price mystery , Frank Stroppa writes, " Prices in Regina have also come down several cents per litre in the past week." This is totally incorrect. The gas price in Regina is currently $ 125.9 cents per litre, which is .01 cents per litre cheaper than it was April 1. Only two independent stations are lower than Winnipeg's lowest price. The last time Winnipeg gas prices were higher than Regina was approximately February 2010. WARREN CHUBEY Regina A divided nation My family and all who we have told about the plight of Makoon the orphaned bear cub in Manitoba are outraged that in this day and age he could possibly be released to his doom before he is able to have a good chance of survival. There are thousands of Australians watching this case. Many, like us, are from Animals Australia, a popular animal welfare group. Our impression of Canadians to date is that you are a deeply divided nation. On the one hand, you are forward- thinking and culturally diverse, but on the other you allow such barbarically cruel acts as the seal pups cull and now bear- cub killing. Many countries including Australia have a less than proud record in their treatment of animals, but you are at risk of destroying your reputation as a good tourist destination with backward thinking actions like this when there are far better options available. STUART ARMSTRONG Brisbane, Australia Ignoring the facts Dianne Baker's one- sided letter blaming Israel for the lack of water in the West Bank ( Pawns in their game, June 6) ignores both history and the facts behind the drought. All of Israel, along with Syria, Jordan, Iraq, Iran and Turkey, has suffered a steadily worsening drought situation since 1999, with 2010- 2011 being the hottest seasons in recorded history - which in that part of the world, is saying a lot. To portray Israel as " stealing" Palestinian water so Israeli farms can be lush is ludicrous and prejudicial. If the Palestinians in West Bank and Gaza want to improve their water situation, they should drop their preconditions, recognize Israel's right to exist, and come back to the negotiating table. Jordan did this 18 years ago, and since then has peacefully shared the water table with Israel. ( Israel actually exports water to Jordan in some years). Israel has been recognized by the United Nations as the world leader in water reclamation and recycling ( over 70 per cent) and Israel shares that expertise with water authorities as far away as Manitoba. Israel's new seawater desalinization plant will begin producing 600 million cubic metres a year of fresh water when it opens in 2013. A bit of compromise could see residents of the West Bank and Gaza share in this 50 per cent increase in available water, none of which comes from " their" aquifers. Finally, I hope Baker is working hard to reverse the trend she mentions in her letter, that of boycotting Israel and its partners. I can think of a second country whose immigrant majority has a problem providing water to its aboriginal minority. If the world chooses to boycott countries on that basis, Canada, as the residents of Island Lakes can attest, is doomed. DAVID SELCH Winnipeg �� While Dianne Baker's letter merits some comment in its own right, even the most casual reader must be appalled at the choice of the headline, Pawns in their game. This calls to mind the inane and ultimately murderous libel propagated by the Third Reich ( and others who ought to have known better) that the world is controlled by a secret conspiracy of Jews and Freemasons. Out of charity, let us simply assume ineptitude and not ill intent. JAMES CHRISTIE Winnipeg But who's the dummy? Re: Oil spills into Alberta river system ( June 9). The caption below the photo of Alberta Environment Minister Diana McQueen and Premier Alison Redford says it all. The minister and the premier are looking downward with closed mouths, although the caption reads, " McQueen and Redford discuss the oil spill at nearby Dickson Dam." Ventriloquism, perhaps? MARNIE TURNER Winnipeg HAVE YOUR SAY: The Free Press welcomes letters from readers. Include the author's name, address and telephone number. Letters may be edited. Letters to the Editor, 1355 Mountain Avenue, Winnipeg, R2X 3B6. Fax 697- 7412. Email letters@ freepress. mb. ca Letters represent the opinions of their writers and do not reflect the opinions of the Winnipeg Free Press or its staff. �� LETTER OF THE DAY Re: Riel House closing down ( June 11). I was deeply saddened to read that the federal government has decided to close Riel House. But I was not surprised. This is because the federal government under Stephen Harper has repeatedly shown its disdain for Canadian heritage and history ( perhaps this accounts for some of his cabinet ministers' dismal record when it comes to historical knowledge). Riel House is an incredibly significant heritage site not just for Canada, but especially for Manitoba and Winnipeg. I am curious as to whether something might not be worked out where either the province or the city, or a combination of the two, would be able to find a way to fund Riel House so that it may remain open with a staff. Perhaps the staff could be shrunk to one or two employees. Anything is better than leaving the building padlocked and exposed to vandalism. Now that Winnipeg is a rising star economically, one would think it is the least the city could do. GAVIN WIENS Ottawa 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Winnipeg Free Press Tuesday, June 12, 2012 A 11 POLL �� TODAY'S QUESTION The Bombers will allow cowbells at home games after all. What's your reaction? �� Vote online at winnipegfreepress. com �� PREVIOUS QUESTION Are you following the 2012 Euro Cup soccer championship? YES 65% NO 35% TOTAL RESPONSES 3,622 Winnipeg Free Press est 1872 / Winnipeg Tribune est 1890 VOL 140 NO 209 2012 Winnipeg Free Press, a division of FP Canadian Newspapers Limited Partnership. Published seven days a week at 1355 Mountain Avenue, Winnipeg, Manitoba R2X 3B6, PH: 697- 7000 BOB COX / Publisher MARGO GOODHAND / Editor JULIE CARL / Deputy Editor T EL- AVIV - After more than a year of official silence, Israel finally came out publicly against the continued massacre in Syria and called for the removal from office of President Bashar Assad. Deputy prime minister Saul Mofaz told Israeli army radio a " crime against humanity, a genocide is being conducted in Syria today." Mofaz criticized the conduct of Russia, which weakly condemns the slaughter while continuing to arm Assad's murderous regime. " Best case, this is irresponsibility and worst case it is a partnership in the slaughter," he said. Israel has limited options in Syria but is now ready to lobby for international action. Similar remarks were made by Prime Minister Benjamin Netanyahu. Addressing his weekly cabinet meeting on Sunday, Netanyahu said that, for obvious reasons, Israel cannot get directly involved in Syria but it needs its voice to be heard. " This slaughter is being carried out not far from Israel's borders. For understandable reasons, Israel cannot be directly involved. But I think that the West, led by the United States, has an interest in guarding the threshold ( so) genocide does not take place." The statements by Netanyahu and Mofaz put an end to the divisions between policy makers in Israel regarding Syria. Some Israeli policy makers argued Syria is protecting the Golan Heights and does not allow the tension to slip across the border. Lately, however, policy makers in Israel reached the conclusion bringing down the Syrian regime would weaken the axis of Iran, Syria and Hezbollah. In his weekly cabinet meeting, Netanyahu said Israel cannot intervene directly in Syria, " but our hearts are with the Syrian people." The change in Israel's position came amid reports dozens of Kuwaitis are fighting with the Syrian Free Army after crossing from Turkey. Relatives of the Kuwaitis said volunteers from Saudi Arabia, Algeria and Pakistan are ready to join the uprising against Assad. Public demonstrations condemning the bloody regime dominate the scene in Syria. If this continues, the Syrian regime will be confronted by public mutiny and economic crisis that will drain the financial resources of the regime. The Syrian regime has long been condemned by western countries for providing a haven for terrorists. The Syrian role in Lebanon has not been forgotten by international community. The Syrian crisis could develop into a wider, comprehensive war in the Middle East if it continues to move towards civil war. This is one of the reasons Moscow is sending Russian Foreign Minister Sergei Lavrov to Tehran Wednesday. Lavrov is rushing to Tehran to discuss the nonproliferation issues in Moscow later this month. But the Syrian file is high on the agenda. Lavrov knows the non- proliferation subject is high on the agenda in Tehran, but the Syrian crisis will be also discussed at length. Samuel Segev is the Winnipeg Free Press Middle East correspondent. PETER MORICI SAMUEL SEGEV Riel House stands in South St. Vital. A national treasure Israel breaks silence on Syria, condemns ' genocide' Spain is not Italy or Greece A_ 11_ Jun- 12- 12_ FP_ 01. indd A11 6/ 11/ 12 8: 29: 41 PM ;