Bin Laden amnesty rescues Spanish property?

While in Britain, McBroon & Co thrash around to salvage their self-inflicted broken economy and pump liquidity into the system with hand-outs to banks and businesses, Spain takes a more sanguine view of things. Spanish banks are not involved in the sub-prime loans scandal that has led to the demise of a dozen or so banks in the US and UK - and they have more cash in their coffers as required by regulator, the Bank of Spain.

The Spanish Government has untold billions stacked away for this particular rainy day and knows how to get its hands on another EUR 54 million at no cost to itself.The money is under the floorboards or mattresses of Spanish homes and in the safes of small businesses. It is estimated there are 108 million EUR 500 notes hoarded away, the proceeds of under the table property deals and tax-cheating and because there is a long standing mistrust of banks among the populace.

That’s a quarter of all the EUR 500 notes in circulation in Europe and it’s one of the highest denomination notes in the world. They are seen so rarely they have been nicknamed "Bin Ladens". It has been suggested that the tax office tries to get the notes into circulation el pronto as a further boost to the economy as it works out at two notes each for man, woman and child in the country.

So if the economy gets worse, Plan B could be to find the Bin Ladens and get them into circulation. It would mean a fiscal amnesty to persuade holders of the notes to abandon Mattress Banking to save the nation…

In the long-term, putting the extra billions into the economy would help keep house prices stable in Spain as the notes would not be available for deals involving under declarations and that might mean the end of the property prices variations in official reports.