jackytoo

Saw this link posted on SPI forum. Interesting seeing as we have all these discussions about who has the most debt. States that Spain is in a worse position. Interesting article, picked this out for those of you can't be bothered to follow links.


Moreover, Spain has virtually the highest non-financial private debt-to-GDP ratio of all the major economies. Its ratio is almost twice that of Italy’s. Its fiscal deficit last year was probably higher than the official estimates, close to 9% of GDP (the previous Socialist government routinely lied about its figures – in fact, no country, not even the US, has lied more extensively about the condition of its banks. Spain, relative to GDP, has the largest shadow real estate inventory in the world, with the possible exception of China, which probably doesn’t even have a reliable second or third set of books


http://wallstreetpit.com/89336-the-e...pain-not-italy

steviedeluxe

"If Europe ever fixes its banking system, it may be because Madrid has shown the way."
(from the FT)

http://www.ft.com/cms/s/0/a95a13fa-5...#axzz1lhL22lFV

cricketman

Nothing I havent read or heard before. It could very well be true

It is true that Spanish banks have (probably) over a million over-valued properties on their books
It is true that many Spanish people have a high mortgage worth hundreds of thousands on a rather modest city flat while they earn just 1-2k per month

Not sure the government lied though. I got lambasted on here when I said that the Spanish government were going to make their 3% deficit target this year. In fact "central" government did make this target, but when the books came in from the autonomous communities, this pushed the deficit up to 8% (the most indebted communties were already PP governed btw). This is a huge structural flaw in Spanish politics, if a central government can't "control" then it is pretty useless

Economically Spain is going to be screwed for at least 10 years, but:
1. I dont think it will actually effect life in Spain that much. Families, whether its parents or grandparents remember much worse times, this will help keep peoples feet on the ground
2. Look closely at the numbers for the UK or US for the coming years and they look just as scary - and they have a populous and way of life where earning big bucks is needed just to standstill

I repeat, this economic cycle is ending. The bankers have squeezed every percentile of growth out of it. Much of which was by inventing numbers and zeros on a computer screen rather than increases in production. The older people used to Anglo-Saxon economies may not like to hear it, but I predict a completely different type of economy to be reborn out of this - and hopefully a fairer and more sustainable one

amideislas

Nice sentiment.

Unfortunately, it doesn't seem to be going that way. If only they would have ackowledged the problem sooner... But, then again, they did manage to maintain their jobs by denying it.

Euro Breakup begins in 2012

Partial Euro breakup inevitable in 2012

French Euro breakup plan

Euro breakup biggest threat in 2012

Euro breakup needs to be orderly

steviedeluxe

What happened to the Spain/Italy/France will have to pay too much interest panic stories? Seem to have died a death.

steviedeluxe

Spanish companies welcomed again by the markets and foreign investors

http://www.thecorner.eu/2012/02/span...comed-markets/

All make believe stuff though. So long as a coffee or small beer costs me 1.30 on my next trip to Madrid, that's what really counts

cricketman

Me thinks you are using the "EU" as a scapegoat

The economic problems started in the US in 2008 (that's not to say it is all their fault). This has now spread to Europe

The EU problems are a symptom of the wider economic problems, not a cause. The cause is that the economic model relies on year-on-year growth - a growth that was easy to come by post WWII with the economic and population decimation that ocurred. The same reason why countries allow hundreds of thousands of immigrants into their countries each year, this is "new" money even if the immigrants are relatively poor so helps GDP growth

The current system will need WWIII to reajust or to be exchanged for a new system. I opt for the latter. I am not fighting a war for the bankers!

amideislas

So, despite the well-documented and widely accepted explanation that decades of EU member states' overspending (and lying about it for years) on welfare and generous benefits, unneccesary public expenditures, ineffective tax policy, increasing unemployment and resulting burdens on the welfare system, over-regulation, systemic corruption, collectively causing the banks to take on loads of bad debt, resulting in bail-outs, causing higher bond yields and lower credit risk ratings, leading to unsustainable interest rates on operating capital, all of which only a handful of not-so-credible Eurocrats continue to deny?

Ahh, OK then, thanks for straightening me out on that.

Now that's settled, when do you think the Euro breakup will begin? Most agree that Greece is getting pretty close to being forced to leave the Euro (plans are already in place for this). Could be any day...

Who's next? Portugal?

After that, I reckon many of the member states will see the light and choose to return to their own currencies, so they can begin the laborious task of pricing themselves back into the world economy.

cricketman

I really cant be bothered to reply to your posts any more. There really is no point

Even though you have managed to grow quite old (I think) you havent understood something that most people learn as a teenager. All that is written isnt true! It depends what the writer wants you to know. And of course what you want to know as true.

You can scour the internet and look for evidence to back up almost any belief you want.

I dont know that what I feel to be the situation is actually the case. If I did then I would go and play the markets and become a billionairre And neither do you. So stop pretending that all the answers are so obvious. To think this, and to be so inflexible really is stupid and shows a misunderstanding of the issues

Even the "best" minds and economists in the world failed to see what has happened in the past 5 years economically (except for the odd retrospective looney) and they will fail to predict what will happen in the next 5 years, as will you.

sujee

I wonder if we would even be having this conversation if US government had agreed to a bail out for Lehman Bros.

jackytoo

Pretty much the replies I expected overall: Time will tell and a few of you have been wrong up to now

amideislas

And damned good thing they didn't. I wish they had taken the same approach to all of the banks. More pain in the beginning, but a lot more wealth staying where it should be in the end.

Bailing out the banks has ended up serving only to transfer wealth from the middle class to the rich. This is the real problem.. Real capitalism and free market ideology should have prevented this, but this is not free market capitalism. It's protectionism in its purest form.

sujee

Actually elephant in the room is old hat now. My OH was talking to a senior partner at Goldman Sachs add was assured the correct term is now 'the turd in the punchbowl'. :P

cricketman

Wow, something we agree in

amideislas

I think this article explains it very well

In defence of capitalism

By the way, Cman, bank bailout rationale comes largely from your side of the fence (including US policy, which is leaning further left every day - another rant of mine, although I tend to despise the republican platform and its candidates).

The majority of capitalism purists denouce bank bailouts, as I do.