Does insurance cover your children's mischief?

Oh my god! The TV doesn’t work because one of your children was playing and threw something at the screen or, even worse, knocked it to the floor. These are prevalent accidents when there are young children at home. Would your home insurance cover the repair in these events? 

Children spend all day playing, and it is common that at one time or another they end up breaking something at home. The TV is one of the valuable objects that most easily suffer the consequences of their mischief, especially now that they are lighter than ever and can easily fall if they receive a hit.

The civil liability covers the damage that children may cause to third parties inside or outside the home, since it is assumed that they are caused by accident. However, elements such as our TV screen are not included in the category of damage to third parties, but are damage to the home itself, so they are usually excluded. 

Which repairs are usually covered by our home insurance?

If we have not taken out additional coverage, the damages that are usually covered by home insurance are those caused by water, atmospheric phenomena and those derived from theft. The repair of electrical appliances in the event of a power surge is also usually included, although in these cases there is usually an age limit for the appliance.

In addition, home insurance usually includes the repair or replacement of glass and even sanitary ware, but rarely refers to elements such as television screens. And a broken TV can become a big problem because the repair can be more or less expensive depending on which parts have been damaged. 

The desirability of specific coverage

When you have young children at home, it is advisable to take out insurance to cover any damage that occurs in the home as a result of an accident. This would protect us in the event that one of our children were to break the TV while playing, or even if a lamp were to fall and cause damage to a piece of furniture underneath.

In any case, we must bear in mind that this type of coverage does not protect us from everything. There are always limits and goods that are excluded, as is often the case with glasses. For this reason, it is necessary to read the policy carefully before taking it out, in order to know which damages can be claimed and which cannot.

What to do in the event of a claim?

If your children’s mischief has caused damage at home, it is advisable to contact the insurance company as soon as possible to report the claim. It is usual for insurance companies to give their policyholders a maximum period of seven days to do so from the moment they become aware of the incident. However, in some policies, this period is extended. 

When we speak to the operator, we should explain what has happened and the accident’s consequences. Whoever helps us will confirm whether the damage is covered by the policy. If it is, an expert will come to your home to examine the damage and issue a report with the appropriate solution. In the case of the TV, this could involve repairing it or replacing it with a new one.

If you want to discover fair insurance for your home and for society, check 11Onze Segurs.

L’exuberància econòmica de finals del segle XVII farà creure a les monarquies europees que la riquesa del món és estàtica i que només cal repartir-la. La constant entrada d’or i de plata dins l’economia els permetrà universalitzar la seva idea de civilització, i s’aprofitaran de la meravella causada en aquelles cultures amb pràctiques i creences ancestrals. Dels 700 milions de persones que habitaran el món, quasi 120 milions viuran a Europa, atès que la mundialització —iniciada dos segles abans— els possibilitarà una varietat alimentària que els permetrà allargar la seva esperança de vida. 

En finalitzar el segle, els europeus hauran verificat empíricament tota la terra, la qual cosa els permetrà generar una cartografia basada en l’observació de la realitat. Lluny quedarà aquella geografia imaginària fonamentada en les supersticions dogmàtiques. D’aquesta manera, apareixeran infinitud de descripcions sobre civilitzacions exòtiques dins l’imaginari europeu, el qual dibuixarà un canvi en els gustos —més orientalitzats— i suscitarà una progressiva actitud crítica davant les creences que els europeus tenen sobre el món. Aquest sentiment d’universalitat cultural s’anirà diluint a mesura que l’europeu entengui que el món també està habitat per una multitud de cultures i civilitzacions, les quals són diferents de les descripcions contingudes a la Bíblia.

Per tant, l’adopció del pensament crític comportarà la codificació enciclopèdica de la natura a través del revolucionari mètode científic, el qual es basarà en l’observació, l’experimentació i l’especulació empírica. La física —escrita amb llenguatge matemàtic— descriurà les formes i les mides dels cossos celestes, mitjançant l’ús de la recentment creada geometria analítica. I a partir d’aquest moment, la ciència esdevindrà un corpus de coneixement diferenciat de la filosofia i la religió. Tot plegat desembocarà en una percepció de la realitat que provocarà que les elits intel·lectuals europees es qüestionin conceptes tan bàsics com la propietat, la justícia, el poder i, per damunt de tot, la religió.

El qüestionament de la divinització del poder

De forma clara, l’Església — tant la catòlica com la protestant— haurà de fer front a multitud de veus discordants que dubtaran sobre l’origen diví dels textos sagrats, atès que es qüestionarà l’autoria divina de les Sagrades Escriptures. Aleshores, la religió esdevindrà un assumpte individual i privat entre l’home o la dona amb Déu. I en virtut d’aquesta privatització, els europeus progressivament s’alliberaran de dependre obligatòriament de les disciplines dogmàtiques imposades per l’Església des del segle X. 

El fet de qüestionar el fonament sagrat que justificava l’existència dels Estats cristians, esquerdarà la legitimitat confessional de l’autoritat política representada pel monarca. Amb la presa de consciència del propi jo —a través del principi racional “cogito ergo sum”— s’inaugurarà la filosofia moderna que portarà als savis il·lustrats a qüestionar obertament la divinització del poder reial. 

Aquest innovador pensament racional provocarà un xoc frontal entre els partidaris del poder absolut —en mans d’una sola persona i defensat aferrissadament per totes les monarquies europees— contra els defensors de l’estat natural de l’ésser humà, els quals argumentaran que “cap home no pot ser sotmès a la voluntat arbitrària d’un altre home, ni pot ser obligat a obeir lleis que un altre home no seguiria com ell.” Aquest pensament provocarà una profunda crisi de la consciència europea, la qual obrirà el camí cap a la invenció de la llibertat i la reclamació de la igualtat social.

El poder absolut i el mercantilisme

Els teòrics del poder monàrquic —com Jean Bodin o Thomas Hobbes— justificaran l’absolutisme com la forma més perfecta de govern i l’única capaç de gestionar la gran acumulació de riqueses que s’extreuen de les colònies. L’alt funcionariat —designat pel mateix rei— desenvoluparà mecanismes cada vegada més eficaços per organitzar meticulosament les finances de l’Estat, atès que els seus guanys no només s’aconseguiran per mitjà de la introducció de gran quantitat d’or i de plata dins del sistema econòmic, sinó que també es maximitzaran les exportacions i minimitzaran les importacions amb l’ajuda d’estratègics aranzels. 

Convençuts que la riquesa del món era estàtica perquè només calia agafar-la, intercanviar-la o robar-la, les monarquies absolutistes perseguiran qualsevol intromissió o iniciativa privada que desestabilitzi el sistema del comerç internacional, com per exemple la persecució sistemàtica de la pirateria. En canvi, la multitud de conflictes bèl·lics entre les diferents monarquies europees —al llarg del XVII i XVIII— seran vistos com un intercanvi necessari de riqueses, territoris o persones en què totes hi sortiran guanyant o perdent, i d’aquesta manera es mantindrà el sistema econòmic viu, el qual sempre haurà de sumar zero.   

Les monarquies europees —aclaparades per l’abundància— s’oblidaran completament de la vida dels seus súbdits. Meravellades per la situació, seran incapaces d’aplicar millores socials i econòmiques i aviat toparan amb el greu problema de la pobresa col·lectiva dins les seves societats. I en un context d’un incipient conflicte social —com serà el de principis del segle XVIII—, els economistes de l’època, Colbert, Mun, Serra o Misselden, defensaran l’aplicació d’una política de salaris baixos com única via per aconseguir la competitivitat en el comerç internacional, seguit del pervers argument que “si la població disposa de salaris superiors al nivell de subsistència, aquests esdevindran els causants de la reducció en l’esforç laboral.” 

La riquesa extreta de les colònies, no només s’acumularà o es transformarà en els recursos productius que l’economia requereix, sinó que sobretot s’utilitzarà per ser exhibida a través de les arts —arquitectura, pintura i escultura—, les ciències i la cultura. I tot plegat desembocarà en una paradoxa quan les principals monarquies absolutistes —francesa, austríaca, russa o castellana— seran capaces de viure dins dels seus fastuosos palaus, en la més exquisida i refinada opulència, sense importar-los l’escassetat de recursos amb els quals vivien la majoria dels seus súbdits. Tanmateix, aquesta dinàmica estructural s’esmicolarà amb la irrupció del racionalisme il·lustrat dins del pensament europeu, que contribuirà al trencament definitiu de l’statu quo de segles d’excessos monàrquics. El despotisme il·lustrat li atribuirà al monarca la missió de portar el progrés econòmic i el benestar social a tots els seus súbdits, cosa que produirà infinitud de conflictes socials. I en aquest punt, no totes les monarquies europees abordaran el problema de redistribuir la riquesa de la mateixa manera.

Dues solucions per a un mateix problema

Una de les respostes la donarà la Corona de Castella a través de les seves polítiques econòmiques, les quals encara li permetran ostentar una relativa predominança internacional. Malgrat tot, l’extracció massiva de metalls preciosos del “Nou Món” —que li havia permès obcecar-se amb la seva particular idea d’universalització cultural— li havia provocat una miopia i una nul·la adaptabilitat als moviments canviants de l’economia. Per tant, davant el repte de redistribuir la prosperitat entre els seus súbdits, es trobarà atrapada entre un deute gegantí i una societat poc dinàmica que dependrà majoritàriament de les decisions reials i dels recursos que arriben de les colònies. Tot plegat posarà de manifest l’existència d’una piràmide social parasitària que provocarà que un sol camperol —condicionat pel sistema de censos i de furs— estigui obligat a alimentar a trenta no-productors.   

Per tant, l’estratègia que seguirà la Corona de Castella —a través dels ‘validos’ del rei, els famosos duc de Lerma, el comte-duc d’Olivares o el pare Nithard— serà la d’exercir una forta pressió fiscal mitjançant l’increment o creació de nous impostos sobre les fràgils economies camperoles, o sobre les classes urbanes per mitjà de constants pujades de preus i baixades de salaris. Aquest programa econòmic buscarà obtenir els màxims recursos per a continuar sustentant la idea d’Imperi, atès que fins aleshores els havia permès gaudir d’una balança comercial positiva. En contraposició, se situaran la noblesa i el clergat, els quals quedaran totalment exemptes de totes aquestes càrregues fiscals, a part de permetre’ls incrementar el cobrament de les seves rentes. Al capdavall, tot desembocarà en un important empobriment de la societat castellana, amb conseqüències tan desastroses sobre la natalitat i el despoblament de grans territoris de la Meseta, i que no es recuperarà totalment fins a principis del segle XX. I per reblar el clau, la societat serà segrestada pel Tribunal del Santo Oficio de la Inquisición, la qual vetllarà —a través de la censura, la crema de llibres “prohibits” i un integrisme misogin— perquè no germini cap pensament crític que defugi de la línia oficialista. 

Per altra banda, trobem la resposta dels territoris del nord d’Europa —com són la Corona anglesa i les disset Províncies Unides— la qual suposarà introduir amb fermesa les idees il·lustrades dins la societat, la política i l’economia. Mentre Anglaterra acabarà constituint-se en una monarquia parlamentària, a través d’un procés polític que limitarà el poder del monarca i la separació de poders, la unió militar d’Utrecht —constituïda per les disset Províncies Unides— combatrà enèrgicament fins a la Pau de Münster l’ocupació de la Corona de Castella per esdevenir la república de les Províncies Unides del Nord. Ambdós territoris adoptaran una nova mirada sobre el comerç que provocarà la mutació del sistema econòmic i adoptarà una lògica de lliure mercat sense restriccions ni proteccions estatals. La generació de riquesa ja no es farà a través de la sang, sinó que serà per mitjà de l’habilitat que tingui l’individu en l’acumulació de capitals cosa que farà aparèixer la plusvàlua, origen de la nova conflictivitat. I en aquest nou paradigma econòmic, l’Estat ja no hi tindrà cabuda atès que els elements bàsics i irreductibles que impulsaran aquesta nova mentalitat serà —tant per empreses com per individus— sota l’imperatiu econòmic de maximitzar els guanys i minimitzar les pèrdues.

Canvi de paradigma econòmic

La universalitat cultural que havia imperat fins aleshores serà substituïda per nous raonaments basats en “si es pot demostrar que el rendiment econòmic que tota la producció industrial del món ha d’estar concentrada a Madagascar o a les illes Fiji o que tota la població d’Àfrica negra s’ha de traslladar al Nou Món per a treballar en les plantacions de cotó o de la canya de sucre, no existeix cap argument econòmic que pugui aturar aquestes iniciatives.” I d’aquesta manera, el capitalisme imposarà una globalització cada vegada més extensa i arribarà a regions cada vegada més remotes, les quals seran transformades de manera més profunda. 

El món es dividirà en parcel·les productives seguint criteris globals com “no té cap sentit produir plàtans a Noruega perquè la seva producció és molt més barata a Hondures”. Per tant, quan els terratinents argentins només produeixin carn o els grangers australians només esdevinguin experts productors de llana, serà el moment en què hauran abandonat la seva pròpia producció agrícola, ja que els resultarà més beneficiós comprar les produccions cereals per l’autoconsum a l’exterior. D’aquesta manera, aquestes transaccions els permetrà especular i treure més rendiment econòmic a les seves inversions. 

I en aquest sentit, tant Anglaterra com Holanda esdevindran els únics exportadors de capitals i serveis financers a les colònies americanes o asiàtiques amb la finalitat de desestabilitzar els antics imperis —Castella i Portugal— i d’aquesta manera assegurar-se les matèries primeres per a la incipient revolució industrial. Les borses de Londres o Anvers —fundades a finals del XVII— esdevindran les capitals comercials de la nova economia que es basarà sobre les expectatives d’un dinamisme especulatiu, les quals seran participades principalment pels descendents d’aquells jueus sefardites expulsats per la Monarquia Hispànica a finals dels XV.

Des del principi, tant Anglaterra com Holanda van tenir la certesa que per desenvolupar el nou paradigma econòmic calia engegar un procés de concentració de l’activitat econòmica per mitjà de la urbanització de les zones costaneres, cosa que els possibilità l’impuls de la construcció naval i el desenvolupament de manufactures properes als ports. Això els va permetre convertir els seus litorals en espais econòmicament molt dinàmics i potents. Un fet similar succeirà a la costa peninsular mediterrània, la qual passarà a ser un dels territoris amb un creixement econòmic similar al dels territoris del nord d’Europa. Serà aleshores quan Catalunya adquirirà la cohesió territorial sobre les bases d’un sistema urbà estretament entrellaçat amb Barcelona —com a centre comercial i polític— alhora que es desenvoluparà la indústria pels pobles propers —Sants i Sant Martí de Provençals— i l’activitat mercantil es reorientarà cap a l’Atlàntic i l’interior peninsular.

11Onze és la fintech comunitària de Catalunya. Obre un compte descarregant la super app El Canut per Android o iOS. Uneix-te a la revolució!

The Annual Percentage Rate or APR is the interest charged for borrowing that represents the actual and effective cost of the loan expressed as a percentage, since all the costs associated with taking out the loan are considered. We explain how it is calculated.

If you want to compare mortgages or any type of loan, it is essential to know what the Annual Percentage Rate or APR is. In Spain, this indicator must appear in the advertising and documentation of financial products that refer to a loan. This will help you compare the real cost of two or more loans over a specific term.

The several lending options that you can find on the financial products market have two interest rates associated with them, the NIR and the APR, both of which financial institutions are legally obliged to inform customers about before they give out a loan. Although they are closely related, there are important differences that must be known to know the effective cost of a loan.

Differences between the NIR and the APR

The NIR or Nominal Interest Rate is a fixed percentage that the bank establishes for the provision of money and which represents the sum of the Euribor plus the differential applied. In other words, it is the amount to be paid to the financial institution in exchange for the capital loaned. This cost can vary depending on the amount of the loan, the repayment period and our economic profile. However, the NIR does not include the costs associated with the mortgage and, unlike the APR, it does not have to be calculated annually.

The APR takes into account all the costs associated with taking out the loan, so it includes the NIR and any fees related to the loan, such as the arrangement fee, the transaction costs borne by the consumer and the frequency of payments. However, we should keep in mind that the APR does not include the cost of some concepts, such as notary fees or insurance premiums and other products linked to the transaction.

It is also important to remember that in the case of variable interest rate loans, it is not possible to determine their future evolution, so the calculation of the APR is just indicative. In any case, it is the most reliable indicator when it comes to determining the real cost of a loan, beyond the commercial technique behind the APR announced in the headlines of the offers and promotions presented by financial institutions.

How to calculate the APR

The APR interest rate is calculated using a mathematical formula (APR = (1 + NIR/f)f – 1) that takes into account four factors: the amount of the loan; the NIR; the repayment terms; and all the costs related to the loan. You can use one of the APR calculators on the Internet, such as this one from the OCU, or enter the data in the mortgage or personal loan simulator offered on the Bank of Spain’s website.

Remember that before carrying out any simulation, it is necessary to have these data to obtain the most realistic percentage possible: initial capital, NIR, constitution and periodic mortgage costs, notary, agency and land registry fees. The periodicity of the repayment, i.e., if you are going to pay monthly, quarterly, etc. As well as the repayment period of the mortgage.

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Financial crises are often preceded by rapid increases in leverage, known as a credit boom. But what exactly is leverage? And why can it leave the economy more vulnerable to an economic downturn?

Leverage is a strategy used by businesses and individuals to maximise the potential of their investments by using borrowed funds instead of their own funds, essentially borrowing to invest. In other words, it is the ratio of assets (investment) to equity, and involves the use of debt to finance business operations or investment projects, allowing them to invest more capital than they have thanks to the loan they have taken up.

This method is based on the idea that the cost of borrowing can be lower than the return generated by the investments that are financed with these loans. The leverage effect is positive when the economic return on the investment is higher than the cost of financing, or negative when the return is lower than the cost of financing. This implies that leverage carries a risk, since if the investments do not generate sufficient return to cover the cost of borrowing, the investor may have difficulty repaying his debt.

This is a practice that, when applied in a macroeconomic context, can be a double-edged sword. On the one hand, it can stimulate GDP growth or economic recovery during an economic downturn, but on the other hand, a high level of leverage can expose the economy to a slowdown in activity or an increase in asset prices. Thus, creating a debt bubble fuelled by what is known as a credit boom.

A cyclical dynamic of asset accumulation, crises and asset devaluation

The excessive leverage accumulated by the banking sector significantly aggravated the 2008 financial crisis, which originated in the bursting of the housing bubble in the United States in 2006. An economic disaster that ruined millions of people and triggered a liquidity crisis that led to the bankruptcy of large companies.

Banks were forced to reduce their leverage as a result of rising funding costs – largely due to defaults – and because of regulatory pressures to achieve an adequate level of capital. Some financial institutions such as Lehman Brothers were unable to cope with the collapse of their huge mortgage-backed investment portfolio, four times the value of their shareholders’ equity.

But this unprecedented banking collapse did not come as an equal surprise to everyone. Nouriel Roubini, professor emeritus at New York University’s Stem School of Business, warned at an International Monetary Fund seminar in September 2006 that sustained home appreciation had induced many homeowners to take out second mortgages, which they would now be unable to pay, and that the country was therefore heading for “the worst housing crisis in decades”.

Unsustainable long-term debt

Roubini himself warns that even today, banks are one of the most highly leveraged sectors and that supporting greater liquidity will not prevent a financial crisis and economic recession. Moreover, unlike the 2008 scenario, it is not only banks but the investment market sector that could be affected.

Banks are facing much higher capital costs due to higher interest rates on new loans and on liabilities they have already sold. These higher rates are causing massive losses to creditors holding assets with long-term yields, which may cause a debt crisis, with high public and private deficits.

This increase in the cost of credit together with the generalised rise in prices is undermining the purchasing power and solvency of households and businesses. It is foreseeable that many of them will default on their loans and defaults will soon spread throughout the financial ecosystem. Moreover, Roubini argues that “most depositors are fools and will keep their money in accounts with an interest rate close to 0% when they could be earning 4% or more”.

And it is true that the market offers highly secure investment options that give higher returns than bank deposits, but whether we opt for safe securities such as precious metals or insured investment products, it is imperative to protect our savings in the face of a crisis that seems inevitable.

Protecting savings with physical gold has been one of 11Onze’s main contributions to its community, and now the range of products is expanding. This is why, in the face of volatility, still high inflation and the growing crisis of confidence in the banking system, gold is once again strengthening its position as a safe-haven asset. Discover Gold Seed at Preciosos 11Onze.

Gold is traditionally regarded as the best asset for inflation protection, a reliable hedge against the risk of losing purchasing power. However, some investors see government bonds as a safer alternative to invest their money in the face of market uncertainty. We analyse the advantages and disadvantages of these two options.

Gold purchases over the past three years have had a stellar performance with record highs for investors and have seen a 40% rise in value. The safe-haven status generally attributed to gold has been confirmed by the uncertainty caused by the pandemic and subsequent inflation, which has penalised the performance of other assets. Once again, gold has provided a valuable hedge against an uncertain future.

Some economists argue that gold only increases in value when a currency is devalued or in a context of high inflation, and that it does not offer adequate returns in other market scenarios. While it is true that gold tends to increase in value in times of financial instability or currency devaluation, these are not the only factors that increase its valuation above average. For example, in the period from 2013 to 2020, inflation was very low, and the most damaging effects of the crisis and economic instability had already been overcome in much of the world, yet the value of gold rose steadily.

Even so, we have to bear in mind that, if we choose to invest in gold through an investment fund or ETF, we will not own the precious metal, which means it loses much of its intrinsic value, and it is a model that gives more versatility, but requires basic stock market knowledge that requires professional intermediaries in the sector. When you buy physical gold, you own the metal, whereas when you invest in digital gold, you have a right or an option. Moreover, because it is not a book entry, you cannot suspend payments. Unlike other financial assets, gold can always be on hand.

Government bonds

The biggest attraction of buying government bonds is that we are assured of a certain return, positive or negative, on the investment. This may seem contradictory, because historically, when someone lends money to someone else, they charge them interest, and therefore it may seem difficult to understand why some bonds are trading with a negative return.

This apparent inconsistency is due to the fact that some large investors seek safety in safe-haven assets, such as government bonds, during times of financial market turbulence. The 2008 crisis, with the collapse of Lehman Brothers and other banks, showed that the Deposit Guarantee Fund, which in Spain covers 100,000 euros per customer and institution, is nothing more than a consolation prize if we are talking about deposits of millions of euros.

Therefore, when we are talking about investment groups with large amounts of money, it may be preferable to buy bonds from countries with the highest credit rating (AAA), even when they offer a negative yield, since, unlike banks, this guarantees us pretty much all of our assets. Still, there may be a speculative motive: buying debt with a negative yield in the expectation that this yield will fall further so that the price of the bonds will rise.

This is a scenario that is hardly applicable to the medium or small investor, who tends to buy securities issued with a nominal value and which pay an explicitly determined interest on the investment, quarterly, every six months, or at maturity. And yet, they can also be traded on the stock market to offer investors the possibility to sell or buy before their maturity.

Security and profitability

Before investing, there are many factors to consider when deciding which financial asset is most suitable for us. And it is vital to assess the risk we are willing to take and to clearly define our investment objectives. As a general rule, the higher the return on an investment, the higher the risk. Conversely, if we want a very safe investment, we will have a low return.

Precious metals, especially gold, break this rule somewhat, with very high returns in times of economic crisis, given their status as safe-haven assets, and relatively stable prices when there is less demand in times of economic growth. But they always maintain a long-term upward trend, which is also accompanied by high liquidity thanks to their intrinsic value.

On the other hand, the risk-return trade-off is evident when it comes to government bonds. Fixed income securities issued by governments are considered risk-free as long as we are talking about developed countries with solvent economies, and with a practically non-existent probability of defaulting on payments to creditors. Even so, they are always accompanied by relatively low or even negative yields in the case of Germany.

This low yield can be affected by inflation, if we take into account that the coupons paid on fixed income are nominal over time. Therefore, when inflation rises, their real value falls and the return on these bonds is also lower. This is a scenario in which the purchase of gold offers better inflation protection, thanks to a higher yield, while maintaining high security and liquidity. If you are interested in buying gold, 11Onze will help you do so starting next week.

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The multiple bank failures that took place during the 2008 financial crisis familiarised us with the concept of a bailout, a mechanism whereby a government uses public money to rescue financial institutions. However, there is another, less well-known option where shareholders, creditors, and depositors can take over the losses.

Big banks have become used to playing Russian roulette with money that is not theirs. If business is good, they keep the profits, while if it goes badly, the losses are socialised at the taxpayer’s expense. This is a globalised phenomenon that has been repeated over time and became evident with the multiple bank bailouts and financial sector restructuring that took place during the 2008 financial crisis.

Thus, to avoid the collapse of the banking system, the first option for many countries was to bail out ailing institutions or, in other words, use taxpayer’s money to cover the red numbers caused by the irresponsible financial management of the bankrupt institutions’ management teams.

In the case of Spain, major international organisations estimate the costs of the bank bailout at 6% of GDP. More than 64 billion euros in public money was injected into the banks, much of which has already been written off after the banks have only returned a tiny amount to taxpayers.

External bailout vs. internal recapitalisation

The two basic models currently used by the financial system to help struggling banks are the bailout or external rescue and the bail-in or internal recapitalisation. While in a bailout the state, i.e. the public as a whole, bears the cost of recapitalisation, in the case of a bail-in the losses are borne by shareholders, creditors and ultimately depositors, as happened in Cyprus in 2013. The concept of bail-in is based on the notion that if the bank needs to rebalance its balance sheet, it must first use its own capital.

Since January 2016, a bail-in system has been in force in the European Union. According to this resolution mechanism, shareholders receive the first blow. If this does not stabilise the bank, subordinated creditors take over. Next in line are the holders of senior bonds and, finally, uninsured depositors, i.e. those with more than 100,000 euros in their accounts, with preference given to the deposits of large companies over those of households and SMEs, while small depositors remain unaffected.

It is therefore a mechanism designed to minimise the possibility that the costs of resolving a non-viable institution will be borne by taxpayers, while at the same time ensuring that systemically important institutions are resolved without endangering financial stability.

Can the bank or the State take my savings in case of bail-in or bankruptcy?

Yes, if you have more than €100,000. If you have less than €100,000, you will be excluded from the bail-in and will be covered by the Deposit Guarantee Fund in case of bankruptcy. This body guarantees the return of money from savings accounts, current accounts and fixed-term deposits.

Let us remember that the FGD guarantees 100,000 euros per depositor and institution. Therefore, to insure higher amounts, it is advisable to have the capital distributed among different entities, without exceeding 100,000 euros in any one of them. Alternatively, if an account with 200,000 euros is shared by two people, each of them would have 100,000 euros insured.

Another option is to open a current account with a fintech such as 11Onze, which operates through an Electronic Money Institution (EMI) and is required by law to insure 100% of its customers’ deposits in the event of bankruptcy, regardless of the amount.

Are there any real examples of bail-in?

In Spain, on 7 June 2017, Banco Popular was the first Spanish bank to be bailed-in under the European Union’s new framework for bank resolution. Shareholders and subordinated debt holders lost their investment, and the bank was sold for one euro to Banco Santander, thus avoiding the use of public money. In this case, depositors, even if they had more than 100,000 euros in savings, did not lose their money.

The bank bailout in Greece in 2012 led to the liquidation of Laiki Bank and the restructuring of the Bank of Cyprus through a bail-in. In this case, customers with up to €100,000 in savings did not lose their money, but big depositors lost a large part of their savings or, in some cases, this money was converted into shares.

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Amid the debate on the changes that need to be made in education to reverse the low standards of Catalan students, 11Onze’s Director of Content and Media, Toni Mata, poses a new question: why aren’t the citizens of the future being educated financially?

So much has been said about the poor results of Catalan students in the PISA report that it seems the only solution will be to keep talking. Parole, parole, parole, as Xavier Massó of “Profesores de Secundaria” paraphrased a few days ago on Rac1. The truth is that suddenly, the country seems to be worried that young people don’t understand what they read. Is it a surprise? Is anyone interested in the new citizens learning something that will make them capable of living a fruitful life, as free and happy as possible? If this were the case, surely the educational curriculum would be quite different and financial education would surely play a central role.

In Catalonia, young people leave secondary school and high school without knowing how to read a payslip. Without understanding how taxes are calculated or what they do. Without having the remotest idea of how unemployment benefits or sick leave are calculated. Not understanding how money is created, what inflation is or how interest on a loan is calculated. How can our children be free citizens if they are unable to understand how to manage a commodity as essential to their lives as money? Some will say that in the humanistic and social baccalaureate, there is a subject of economics. And that is true. Well, not to worry then, I’m sure these students will teach it to the students of the other modalities.

And the adults?

They do not fare very well. According to OECD studies, only 34% of European adults have a minimum knowledge of financial literacy. It is most probably this widespread lack of knowledge that makes it possible for us to give so little importance to financial education. Secondary schools can indeed ask to participate in the financial education programme in schools. But here we are: which schools will ask about it if it is optional? How many workshops will be offered? And, above all, who will teach them? Behind the financial education programme in schools offered by the Generalitat, there are all the big Spanish and Spanish banks (formerly Catalan and Spanish). Are we really going to entrust the financial education of our sons and daughters to workshops given by bankers? And to what extent will the bankers be interested in our sons and daughters questioning whether the current model is acceptable?

It is frankly disheartening to see how the Department of Education fails to provide our children with the minimum tools to understand the world and to flourish by themselves. But all of this makes great systemic sense because it guarantees generations of dependent and therefore very complacent citizens. If you don’t know how the world works, it is impossible to change it.

But everybody relax! The Department of Education announced the creation of a commission of experts where, for sure, there will be representatives of prestigious foundations which in turn are full of more experts and which are very well-endowed with grants. So when they meet in this commission they will be very happy and no one will raise their hand to ask if they have to hire experts, commissions and foundations to do the work of the Department of Education, what exactly is the Department of Education for? So we could go back to financial education, and we would realise that knowing how public money is managed is also a dangerous subject because someone might ask these kinds of questions that are not in anybody’s interest.

Let’s try to find a solution

At 11Onze, we have been committed to financial education since the beginning. There are courses available in Learn, we started to roll out the 11Onze School project, we launched the series El Diner, and we continue to educate and inform about economics and finance every day through 11Onze Magazine. We try to make the economy understandable so that citizens can make informed decisions.

But the absolute truth is that we citizens are on our own. And that the years go by and the feeling of loneliness increases. And that there is only one way forward: to come together and make an effort. Hence, 11Onze’s desire to create a financially educated community. Only education will set us free. And quite clearly, this is the problem.

11Onze és la fintech comunitària de Catalunya. Obre un compte descarregant l’app El Canut per Android o iOS. Uneix-te a la revolució!

Summer is coming and many people are already starting to plan their holidays to be able to disconnect from the routine by taking a trip or moving away from their usual residence for a few days. Even so, before leaving the house alone, we need to take into account some important aspects to avoid surprises on our return.

The return to normality after the sanitary crisis was a source of joy for many citizens who could finally enjoy their summer holidays without restrictions, but it also cheered up people prone to kleptomania, whose usual line of ‘business’ had been disrupted by the virus.

Theft claims at the height of the pandemic were down 23.5% in 2019, but over the past two years we have been approaching the figures prior to the movement restrictions. During holiday periods and weekends, home burglaries tend to increase and, according to a study by Unespa, Catalonia, with 58%, is the autonomous community with the highest probability of suffering a home burglary.

We would therefore like to give you some simple tips that you can follow to avoid burglary in your home while you are away on holiday or, at least, to alleviate the possible consequences.

Basic precautions before leaving

• Do not leave valuables in easily accessible places. If you do not have a safe, it is preferable to take them to a specialised company to store them before hiding them in a corner of the house. If this is not possible, write down the serial number, make and model of the objects to facilitate their identification in case of theft.
• Notify a trusted person of your absence to collect the mail or raise and lower blinds on a regular basis, but avoid telling everyone in the neighbourhood or posting it on social media.
• Make sure you close doors, windows, openings in interior courtyards and the garage. Don’t forget to set the alarm. Even so, try to make the house look occupied with the help of a trusted person who can enter from time to time or with a home automation system that allows you to programme the lights on and off in the house.
• Don’t leave a message on your mobile or landline answering machine that you are out. You can always activate call forwarding or reply to messages when you have access to Wi-Fi if you are outside Europe and don’t want to spend money on calls.
• A home insurance policy with theft cover is a highly recommended option. Bear in mind that it also protects you against unforeseen events, such as a water leak, and can provide cover in the event of squatting or theft from people outside the home.

On your return, in the event of theft

• Do not hesitate to call the police or the 112 emergency telephone number immediately if you hear noises inside your home or find doors or windows forced open.
• Contact your insurance company and have the inventory of stolen objects ready.
• File a report and notify your bank if you suspect that a computer or any other digital device that could contain relevant information about your financial data has been taken, so that they can override your online banking passwords.

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The chronological arc from the Treaty of Tordesillas to the declaration of independence of the United States of America represents the first process – on a global scale – of the distribution and exploitation of the whole world by the European monarchies. During this period, the succulent income produced by the spoils of war or by the indiscriminate plundering of the native populations was transformed into an unprecedented binge of gold and silver, which was introduced into the European economy. For this reason, the construction of the first colonial empires was based on a mercantile economy that enabled them to live up to expectations.

From the outset, the European monarchies were convinced that all the territories of the world belonged to them by right of conquest. In this way, cartography allowed them to gradually extend and possess ownership of land, over which they legitimised themselves as possessors in order to impose – not always by force – their model of civilisation on the native societies.

This process of cultural supremacy was based on the religious certainty of questioning the true human nature of the natives. And the firm belief in this reasoning will motivate the European monarchies to project a geography of large spaces to be Christianised. The greed of the newcomers led to numerous abuses and genocides, but also to an unprecedented demographic catastrophe, as the territories of the new world were reduced to 80% of their native population.

The progressive development of maritime techniques – such as the improvement of the compass, the construction of caravels or the updating of world maps – will allow Europeans to be able to navigate all the seas and oceans that make up the planet in just a few years. This feat will result in the division of the world into two halves, two geographical lines which, drawn between the two poles, will give them the power, signed by the papal authority, to divide the world into zones for navigation, fishing and conquest. The first line will be 370 leagues west of the Cape Verde Islands, while the second will be set at 297.5 leagues east of the Molucca’s.

The discovery of important deposits of precious metals in America – between Mexico and Peru – or the arrival on the islands of Southeast Asian species, led to the foundation or re-foundation of important American, African or Asian cities, which acquired a different territorial role in order to ensure a regular flow of wealth to Europe. The European monarchies thus began to control all trade passing through their territories in order to protect their economic gains.

From the beginning of the 16th century until the mid-18th century, the first colonial empires would maintain a strict mercantile monopoly with their colonies, and trade with people or companies that were not subjects of or related to the Crown would be prohibited. Castile, for example, regarded the English, Dutch and French, not as competitors but as enemies and the cause of corsair practices.

The colonial mercantilist system

Trade with the colonies was based on the premise that the colonists had to sell their raw materials – at a low price and with high taxes – exclusively to companies designated by the Crown. At the same time, the colonists would only be able to buy consumer goods manufactured by this select group of entrepreneurs. Therefore, monarchies will favour the unlimited enrichment of companies and individuals close to the state, since they will be denied competition. This mercantilist system will create useless needs for the natives and will seek to perpetually maintain the colonie’s underdeveloped – whether American, African, or Asian – in order to nullify possible direct competition with the metropolis.

And to make matters worse, the senior civil servants close to the king’s council will also play a very important role in this innovative economic system, since they had the ability to speed up or delay bureaucratic procedures in order to favour one or the other. The emergence of illicit and parallel trade between colonies was therefore inevitable and led many entrepreneurs, both large and small, to seek ways of circumventing the bureaucratic controls imposed by the Crown itself.

Acting as nouveau riche, the first colonial empires – mainly Castile – will spend an indecent amount of economic resources to build their concept of civilisation. This obsession – sometimes uncontrolled – will lead them to embark on countless conflicts of all kinds, such as theological disputes, family conflicts, commercial affairs or lavish megalomaniac constructions.

Financing the empire with precious metals

Coinciding with the time of greatest economic extraction from the American colonies – between the late 16th and early 17th centuries – Castile spent more than 7 million ducats to maintain its fleet in the Mediterranean during the famous Battle of Lepanto. In approximately seven years, a staggering 11.7 million ducats would be spent to finance the countless campaigns in Flanders.

To commemorate the victory in the battle of Saint-Quentin against the French troops, more than 6.5 million ducats will be spent to build the magnificent Royal Monastery of San Lorenzo de El Escorial. Thanks to the construction and launching of the famous Invincible Armada, 9 million ducats were sent directly to the bottom of the sea. And of course, this Catholic and universal civilisation will need to build a new capital on the banks of the Manzanares River. For the reader who is curious about the conversion, the ducat of the 16th and early 17th century would currently be equivalent to around 167.1 euros. True, the figures are… shocking!

Therefore, between 1500 and 1650, the Castilian monarchy – and by proximity, the rest of the European monarchies – lived in a veritable economic bubble generated by the massive influx of precious metals. The latest studies estimate that the Castilian Crown extracted some 17,000 tonnes of silver and 70 tonnes of gold from the American colonies. This metal binge led the state to have a distorted view of the real economy.

The paradox occurred when, despite the huge inflow of gold and silver and the collection of high taxes, they did not cover all the expenses incurred by the state. We should bear in mind that the Castilian Crown would only use this extraordinary wealth to finance all the delusions of grandeur of the Castilian elites, which in most cases would come into direct conflict with the real needs of the population. For this reason, when the oligarchies of a country were more interested in working for lavishness than for the real possibilities offered by the reinvestment of capital, all this leads to the destruction of the productive fabric itself.

Indebtedness of the Castilian Crown

By the mid-17th century, the Castilian Crown was in debt to the tune of more than 100 million ducats. This gigantic debt forced them to declare successive suspensions of payments. To plug this hole, the Crown was forced to issue a large amount of public debt, which would end up in the hands of the main European banks, such as the German banks – the Fuggers and the Welsers – and the Genoese banks. The Crown will pay the Welsers by granting them the exploitation of the mines in Mexico and the right of conquest over extensive territories in what are now Venezuela and Colombia. For their part, the Fuggers will obtain all the commercial concessions over the territories of Chile and Peru. Today, they are one of the most powerful families on the continent.

Faced with the successive financial crises that the Castilian Crown began to suffer, many European businessmen living in the American colonies preferred not to ship their precious metals to Castilian ports – a monopoly granted in Cádiz and Seville – for fear of the massive confiscations decreed by the Crown. They, therefore, sought to invest their assets in other emerging sectors of the colonial economy at the end of the 17th century, such as agriculture, livestock and manufacturing production.

The Castilian Crown was therefore forced to look for new and regular sources of income. For this reason, it set in motion the ambitious plan of the king’s minister, the Count-Duke of Olivares, known as the Unión de Armas, which would require each kingdom that formed part of the Hispanic Monarchy – that is, mainly Portugal and the Crown of Aragon – to contribute a certain amount of money and soldiers.

Relaxing the trade monopoly

Portugal, which had been part of the Hispanic Monarchy since the end of the 16th century, refused to grant any further economic contribution, given that Castile exploited its colonies, which led to a war that lasted more than 28 years. Finally, with the economic support of England and Holland, Portugal managed to free itself from the control of the Habsburgs, but the price it had to pay involved the cession of important territories in Brazil and the change of ownership of the colonies of Ceylon (now Sri Lanka), Cape Town, Goa, Bombay, Macao and Nagasaki, among others.

As for the Crown of Aragon, the Castilian oligarchy did not gauge the situation correctly when it accepted that King Philip IV would swear the Catalan constitutions, a sine qua non condition for obtaining the desired funds. Ignorance of the laws regulating the king’s functions within the Catalan territories would be the focus of important institutional discussions, given that the king – within the Principality – was obliged by law to explain the use of the resources granted. For their part, the Catalans were more interested in having their proposals for new Catalan constitutions approved and grievances addressed than in engaging in absurd wars.

But at the genesis of the institutional debate – between Castile and the Principality – we find a much deeper problem. If, since the end of the 16th century, Castile had moved towards a political system of an absolutist nature, where power resided in a single person, who decided without being accountable to any parliament, the opposite was true in the Principality, where the General Courts of Catalonia were the legislative body representing all strata of society, including the king.

The constant inflow of precious metals into the Castilian economy would remain stable until the mid-18th century, but only a very small percentage would remain within the Castilian economic system since the rest would continue to be used to pay off the monstrous debt of the State. Historiography estimates that it was not until 1820 that the Spanish state recovered from this huge expenditure, largely due to the fact that it had annexed the productive economy of the whole of the peninsular Mediterranean strip at the beginning of the 18th century.

The system of privileges and monopolies developed by the Bourbon trade policy continued to fail, and new agents had to be introduced to guarantee the viability of trade with America. Therefore, with the Royal Decree of Free Trade of 2 February 1778, the monopoly of Cádiz and Seville was definitively broken and Catalonia’s direct trade with America was favoured, which provided a new way of doing business. Funnily enough, today, 34% of Spain’s GDP continues to be contributed by the productive economy of the entire Mediterranean peninsular strip. Therefore, nothing happens by chance…

11Onze is the community fintech of Catalonia. Open an account by downloading the app El Canut for Android or iOS and join the revolution!

L’acceleració de la digitalització, precipitada per la pandèmia, no ha fet més que confirmar la inevitabilitat de la transformació digital de la nostra societat. Una revolució tecnològica que ha canviat la nostra manera de treballar, comprar, estudiar i comunicar-nos, però que posa en qüestió aspectes vinculats amb les relacions personals.

En un món interconnectat on Internet, les xarxes socials i les eines telemàtiques han canviat radicalment la manera de comunicar-nos, ens hem acostumat a parlar davant d’una pantalla, a resoldre els assumptes més trivials del nostre dia a dia asseguts al sofà, a fer les compres des del llit i a treballar en pijama.

La comunicació electrònica ha augmentat la capacitat d’interacció entre les persones, i ens permet aconseguir una productivitat i eficiència sense precedents, tant en l’àmbit corporatiu com individual. L’auge del teletreball ha significat un canvi en positiu per molta gent, especialment pels que han experimentat una millora en la conciliació de la vida personal i laboral. Tanmateix, pels nadius digitals que s’han convertit en nòmades digitals que han fet del món la seva oficina.

La normalització de la convivència entre persones i intel·ligència artificial ens ha permès agilitzar les interaccions amb l’administració, establiments de comerç digital i entitats financeres. Ja no és necessari fer cua a una oficina física d’un banc, d’una asseguradora, o a la del SOC, podem fer pràcticament totes les gestions des del mòbil. Així mateix, han sorgit moltes noves feines basades en les tecnologies digitals, impensables només fa uns anys.

La importància de la interacció física

Tot i l’innegable progrés que ha suposat la transformació digital de la nostra societat, la realitat d’aquesta revolució no és tan idíl·lica com alguns volen dibuixar. L’absència física, intrínseca del món digital, presenta reptes pel que fa a l’empatia entre persones acostumades a l’anonimat dels espais virtuals, les interaccions personals entre treballadors, o la bretxa digital entre la gent més vulnerable i la resta de la societat.

La transformació digital ha propiciat que les fronteres entre el món físic i el digital siguin cada vegada més borroses. I, si ja tenim dificultats en adaptar-nos a aquest canvi de paradigma, pensem que el boom del metavers, l’Internet de les Coses, els NFT i la intel·ligència artificial encara ens acostaran més a una realitat virtual semi immersiva, que deixarà ‘fora de joc’ a una part significant de la població.

En aquest context, es fa evident la necessitat d’abordar de manera integral els canvis socio-tecnològics que estan definint i assentant les bases de la societat del futur. No només per assegurar-nos que la tecnologia segueixi sent una força positiva de progrés, sinó també, per evitar que part de la societat es quedi enrere, o que la immersió en el món digital castri l’essència del que ens defineix com a persones.

11Onze és la fintech comunitària de Catalunya. Obre un compte descarregant la super app El Canut per Android o iOS. Uneix-te a la revolució!