cricketman

Andalucia will fine banks up to 9k euros for every empty property on their books

http://ccaa.elpais.com/ccaa/2013/04/...30_353114.html

Given that there are millions of empty properties on the books of the banks in Spain - and 100s of thousands in Andalucia, this could change the whole economics of Europe.

The banks will be forced to put them on the market at a price to sell, or rent them out at a price to rent i.e. very low prices

This should drive down the rental and sales market across Spain and at the same time devalue the accounts of Spanish banks

All money raised in fines will go towards providing social housing in Andalucia

I've not heard such brave or positive news for a long time. The question is, how will Rajoy prevent this happening?

amideislas

I like the idea, but if this is really true... I'd have to reckon it has potential to spark yet another banking crisis, requiring another bailout, and cause further depression in the housing market. But some would consider that a good thing.

Would Rajoy want to stop it? Maybe, or maybe not.. First, it would have to actually be true, and if true, I would think it would need to have a positive impact on Spain's condition. Otherwise, what would be the point?

cricketman

Economically this could be terrible (in the short term). Spanish banks are propped up by the inflated prices they have put on these empty properties on their balance sheets. Putting a proper market value on them could make most of Spain's banks technically bankrupt

Spain and Europe does not have enough money for such a bailout

Socially it is absolutely the right thing to do, but given the possible extreme consequencies, Rajoy/Merket/EU/IMF are sure to do all they can to block it

EMR

Is this not the heart of Spains problems the power that is given to the regional governments.In effect what real authourity does Madrid have when it comes to finding solutions to the crisis.

cricketman

If Madrid had more power then there would be another civil war - and there may be no Spain

Spain is a diverse country. A lot of people feel Basque, Catalan, Andalucian or Asturian before they are Spanish. As my wife says she is Asturian first and foremost, European next and finally Spanish. Lots of people feel this way

But yes, Madrid has limited power because Spain has the most devolved autonomies in the world, even more so than the USA

EMR

In reading a little of the modern history of Spain I found that Franco rewarded his Generals by giving them the regions as mini kingdoms.
To govern as they pleased when it came to domestic policy. The local goverment structures of today still reflect that and the endemic corruption that resulted with dictatorship being replaced by regional loyalties and rivalries. I am sure that some will say that dictatorship still exists in the way policies are carried out.

amideislas

History has a way of justifying a lot of the things other societies would find unacceptable. It's not unusual - Germany still has a lot of laws that were defined by the Nazis. Some are pretty questionable, but again, history has it's justifications.

Besides, it's always easier to accept or amend an outmoded law or structure than to change it. It usually takes a popular revolution and coup to wipe out the past and start all over again - and even then, it's likely some remnants of the past will remain.

cricketman

Not all at!

The local governments were given so much autonomy to pacify them during the democratic transition, otherwise Spain may not have survived. Almost all the regions (except Valencia) elected a socialist or regionalist government. Their break from Francoism couldnt have been greater

Spain is extremely democratic, in that you elect representatives at local, regional and national level.

The problem is that actually the people at the local level have a lot of power and are not controlled by central government, so they can be as corrupt as they like. So people run to be mayor of a town with the sole purpose of misappropriating funds to get themselves, their friends and family rich. The local people see this but re-elect them because the mayor throws good fiestas and builds a few childrens' parks just before the elections.

Hence all the illegal and pointless building in the South, it was a get rich quick scheme by local "politicians" and developers to take the money from the banks and run. They never needed to sell these buildings, they became rich as soon as the local banks (cajas) gave them the money to build them

rachelk

Putting a roof over the heads of those who would otherwise be on the street, I think is the point.

If a govt or a system can't provide its people with a roof, food and essential healthcare then it's a failure, whatever else it might achieve.

I would not like to be one of those condemned to live on the street in order to guarantee some other definition of economic 'success' or 'recovery'.

EMR

My thoughts were based on the local infrastructure that was set up under Franco remained even if the politcal leanings of those in power changed.
eg, The local francoist mayor was replaced by a socialist, how they behaved did not change.

rachelk

That doesn't make it democratic and many spaniards would argue with you on that one.

HBG

I can see this as a perfectly reasonable solution if a country was in dire need of housing for its citizens, but I'm not aware of that kind of need in Spain despite the recent repossessions.

Such a measure will certainly drive down property prices, but again, is that what Spain really needs? All by themselves, property prices have fallen for years now, and unemployed citizens can't buy houses at whatever level they fall to.

Will it attract foreign buyers? It might, but what kind of buyers? They're not going to buy holiday homes if they can't leave them empty when they're not able to visit.

And do they want to become residents and have to declare their foreign assets?

And if the banks are in a poor state now, this new law could push them right over the edge. I haven't seen much common sense come out of Sevilla for many years now.

cricketman

It doesnt make is "representative", but it is democratic

The problem in Spain is that you vote for parties not individuals, and the parties and closed cliques with their own vested interests

However, I dont see the UK or US as being any more democratic or representative

Pocaloca

There is a dire need for AFFORDABLE rented housing for the unemployed and low paid, many of whom are living in cramped conditions with their parents or even grandparents. And there are millions of properties standing empty, owned by the banks who have very little chance of selling them.

So using this housing stock to solve the problem seems like a no-brainer to me. Good for Andalucia!

amideislas

Yes, very kind indeed! And making this excess of empty housing available to those who have none, sure appears to make sense on the surface. The problem is that how do you reverse it once you've started it? It WILL end up being just a handout. You can't ever take it away - you think there's a potential for a revolt now? Wait till you give somebody a house and then try to take it back. That's about as unfair as it gets (in most people's eyes).

It can be argued that public spending beyond means has a little something to do with public debt. But maybe I'm just silly.

Spending more, and going farther into debt, pushing an already nearly collapsing economy into an irrecoverable abyss somehow doesn't strike me as a rational solution, regardless of how "fair" it is. It's self-defeating, at best.

Seems to me that economic development creating jobs and prosperity should be the focus, not further deficit spending resulting in more and more impoverishment.

You can hand out fish forever, but until you give them a lake and a fishing rod, you'll forever be handing out fish.