It is very interesting to note that the majority of Spanish investors have a very poor impression of the quality of investment fund management in general. So much so that a great many investors opt for simplicity, diversification and the low-cost of ETFs, fed up with paying high fees in exchange for sheer mediocrity, to put it politely. But let’s not forget that ETFs are nothing more than pure replicas of indices and benchmarks of all kinds, and their appeal lies solely in their diversity, low fees and lack of active management (assuming that is a virtue). In this way, investors ensure that returns will not fall below the respective benchmark indices, as no mediocre decision on the part of the fund managers can worsen the linked return… but at the same time they resign themselves to not even having the possibility that active management might outperform the markets. The fact is that, unfortunately, there are an increasing number of disillusioned Spanish investors who have given up on the idea that their investments might outperform the market in a clear and consistent manner over time. They regard it as a pipe dream, an unattainable and utopian dream. And the culprits are none other than banking advisers and Spanish regulation. (more…)
The ECB has denied that it opposed the Spanish Government’s plan to recapitalise Bankia using Spanish government debt. It has simply issued a brief official statement to the media, explaining that the ECB has not been consulted on the Spanish (bank) recapitalisation plans. But what happened a few hours earlier is more than a little curious. 
There is no greater failure than that of someone who gives up on success. Something similar happens to investment funds that stick to their benchmark indices, confident that, despite their mediocrity, the firms they work for will have no trouble marketing these funds on a massive scale, and will never blame them for failing to shine. A bank’s commercial capacity is directly proportional to the mediocrity of its investment products. Perhaps it’s because Necessity is the mother of invention, and fund managers at independent fund management firms (which do not belong to banks, at least not directly) can only compete for a place in the investment sales arena by demonstrating sheer quality and superior returns compared with their competitors. 
There is something worse than being poor and insolvent, and that is having to hide one’s poverty whilst feigning opulence and grandeur. Woe betide anyone who has to pretend to be rich, when they are not, just to keep their business afloat! For insolvency and poverty, when faced with sincerity and honesty, become more dignified, more hopeful and less miserable. The fact is that working in a sector such as banking—which necessarily requires those in the business to feign wealth and stability in order to win the trust of their customers—is something one can live with when the bank is genuinely wealthy and solvent. But when the business goes awry and the leverage inherent in banking itself completely erodes the solvency and soundness of the institutions, that façade of opulence becomes a macabre lie, resulting in the schizophrenic loss of all contact with reality (as we said in
John Mauldin treats us to another realistic analysis this week 
There are many fears that France will not follow the path of austerity and budgetary rigour, should the socialist Hollande win the elections. But the harsh reality is that the colour of the elected president and his electoral programme are not so relevant. Nor does it seem likely that in the second round Sarkozy will win the support of Le Pen's extreme right-wing voters, but even if Hollande were to win the Elysée, his capacity for manoeuvre would be very, very limited.