Six months ago Mariano Rajoy pledged not to give "a single euro of public money" to the banks. Last week this promise went the same way as his pledges on not raising tax - in the shredder.
Spain's right-wing prime minister has announced yet another (fourth) bailout of the country's banks since the onset of the financial crisis in 2008.
Just weeks after he unveiled $10 billion cuts to education and health in what was supposedly an unavoidable requirement to restore health to the country's finances, Rajoy has miraculously found $15 billion to help out his friends in banking. That includes a huge chunk of public money that the government has put into Spain's fourth-largest lender Bankia, which has more of the country's now "toxic" properties on its books than any other bank.
State aid to Spain's private banks provided over the past four years in various forms now totals $150 billion - and that excludes over $200 billion in one percent interest rate loans from the European Central Bank.
Yet within minutes of the Spanish government's announcement on Friday pundits were saying that this latest corporate welfare cheque was not enough and another $40 billion was needed. The ostensible reason for Spanish bankers' insatiable demands for cash is their exposure to "problematic" property loans of as much as $170 billion, equivalent to 17 percent of the country's GDP. This exposure was down to bankers' gambling on the property casino that led to a bubble that burst in 2007, sending the economy into meltdown.
This obsession with bricks and mortar has not only done lasting damage to the environment in large parts of Spain's coastal regions but it has created a massively lopsided economy, starving other sectors of investment.
And it has left millions up to their necks in debt or out on the streets after their homes have been repossessed.
The Bankia operation has been labelled a "nationalization" as the rescue includes the state taking a 45 per cent stake in the company. However, as with bank nationalisations elsewhere, the government will be a passive shareholder, leaving the bank to continue its drive for short-term profits, and the government will seek to sell its stake back to privateers as soon as possible - that is, after its "toxic" property assets have been dumped in a "bad" bank. A royal rip-off for the public.
For Socialist Party opposition leader Alfredo Perez Rubalcaba the priority seems to be that this is a time-limited operation that leads to "no losses for the government" and full recovery of the investment.
But Tomas Gomez, leader of the socialists in Madrid, argues instead that the party should reject the government's banking-sector rescue, which he deems "against the interests of the Spanish people," and instead of relinquishing its stake in Bankia the government should use it to convert the financial institution into a "strong public bank" to help tackle the crisis.
Gomez argues that using money that isn't available for health and education to save a bank which will then be sold off at a "knockdown price to private banks" is "immoral."
The Spanish people, as the owners, should get the long-term benefit of their investment.
Gomez's position appears close to that of the Communist-led United Left, which is calling for full-blown public ownership and control of Bankia and all the other Spanish banks in receipt of public money.
United Left's economic spokesman Alberto Garzon argues that this would allow for the maintenance of the original "social" function of the savings banks, seven of which were merged to form Bankia two years ago.
Priority could then be given to extending loans to families and small and medium-sized businesses. And the empty properties on the banks' books would constitute a stock of "affordable rental accommodation" for those who need it.
On Friday the Spanish stock market had its biggest surge of the year as the government unveiled this latest move to socialise the losses of the banking crisis in order to later privatise the gains.
The state largesse for this most protected of sectors means many a top banker, unlike the millions of ordinary Spaniards thrown onto the scrapheap in the name of austerity, will now keep his job.
And even Rodrigo Rato, who has been fired as Bankia chief, has little to complain about.
A historic senior figure in Rajoy's Popular Party, former finance minister and IMF managing director, Rato was in line for a tidy $2.34 million last year, or 260 times the minimum wage. This is now reduced to a mere $600,000 under new rules on executives of banks receiving state subsidies. But Rato is still in line for a $1.2 million leaving present.
A paltry $600,000 is presumably what his replacement Jose Ignacio Goirigolzarri will be earning. Just as well Goirigolzarri already has a pension of $68.7 million from his former employer, BBVA bank. Otherwise, just how would he get by?
This article was originally written for Morning Star.
Photo: Spain demonstrators protest private banks. Manu Fernandez/AP