Banco Espirito Santo nationalised, debts jetisoned
Portugal’s largest bank has been bought by the government after toxic debts were discovered. Rather than stupidly bailing out the speculators and banking executives, the bank has been divided into two parts, the good part with all the assets, and the bad part with all the toxic debts for all the shareholders and speculators. This is effectively the same as finding the vandals on your wooden ship, making them a raft out of the wood they damaged, and them setting the vandals adrift on it, wishing them good luck knowing that it won’t help them.
Portugal has just invented the bailout we expected to happen in the USA following the GFC.
Fun Fact: Australia was once referred to as ‘Espirito Santo’.