Mike Cross

Spot on Bigglesworth

I love your signature quote by the way

livit

As the saying goes "Its not what you say, its the way you say it".

The media reports predicttions that unemployment will rise 1 Million and the econ will begin to recover in 2010, rubbish.

Nobody can predict 2010, in the same way they didn`t predict 2008-09 in 2006-7.

The media basically grabs any two bit ecomomist view and hypes it, they don`t fabricate the situation, they just quote idiots.

Casa Santo Estevo

More media cods wallop.
http://www.nytimes.com/2009/04/21/bu...=1&ref=economy

bigglesworth

Following on from some earlier points, I have my doubts the Spanish economy will bounce back quickly, for two reasons - construction and tourism.
Last I saw there were 1.5 m unsold new homes in Spain. However much those are discounted, they will remain a burden for some time to come, and will certainly preclude an early resumption of the building boom. Large scale infrastructure projects may take up some slack, but the current account deficit and the diversion of European structural funds to Eastern Europe will restrict that.
Secondly - Tourism - the severity of the recession (actually deeper in much of Europe than in the UK, whatever the British media may say http://online.wsj.com/article/SB1240...=WSJ_TimesEMEA) must reduce absolute numbers. The strength of the Euro will keep many Brits and others outside the Eurozone away too.
The only good news is that the brain drain that will occur from the UK after yesterday's disastrous budget (perhaps the world will rename the UK "Fantasy Island") will increase the number of Brits settling abroad substantially, and some of them may well opt for Spain

Casa Santo Estevo

and then you read this....
http://www.expatica.com/es/news/loca...-stimulus.html
It seems the IMF like what the Government has done here.

BTW When you say tourism I assume you mean ther areas that simply rely on the likes of the British? as I have read in the information sent to us by various bodies that the Spanish, whilst slight down in numbers are still vacationing. it is the amount they spend and where they spend it that is noticable. We have seen this trend too. The Americans seems to keep visiting too.

bigglesworth

Absolutely agree. But the return to, say, 2007/8 levels will take time. Spain's fiscal position is poor certainly, but there is still room to manoeuvre. Inability to devalue the currency, and interest rates that will be set at levels that favour Germany, Holland etc will also make the task more difficult.
Left to its own devices, Spain would IMHO recover much faster than Britain, because it does not have that toxic legacy of massive debts

jackytoo

I agree, tourism down 23 % for the first quarter, less Germans Dutch and French too. Don't know about a "brain drain" to Spain. Doctors etc. earn far less than the UK. and there is the language problem. Most opt for the USA.

bigglesworth

Unemployment figures horrendous

http://www.agi.it/business/news/2009..._first_quarter

mrcusa

Having lived in Spain, UK and USA, my feeling is that the biggest problem for Spain is that they make it so difficult to start a business, and therefore provide opportunity for employment.

The UK is OK, and America positively encourages all business!

The obstacles placed in the way of potential entrepreneurs is absurd.

livit

When you look back at the financial info available in 2007-08 the current situation seemed inevitable.

At the time that info was buried and unless you suspected a problem could easily have been missed or dismissed.

At the moment in Spain something else is begining to creep into the equation.

Currently Spanish banks have lent a great deal of money to immigrants and expats.Bank debt on these loans is building as people have defaulted, 90% of bad performing mortgages are owned by immigrants.

Total non-performing loans, or NPLs, rose to EUR77.65 billion in February, up from EUR71.96 billion in January, the data showed, and roughly four times EUR20.11 billion recorded in February 2008.

Although the Bank of Spain points out the level of defaults is far lower than the US, bad bank debt has reaches 4.2% Of Total Loans ,it is a real possibility that combining immigrant and Spanish defaults could raise this figure significantly in the coming months.

Searching bank debt yesterday I came across forums dedicated to Expats who have debt in foreign countries, mostly US and Spain.

Many mortgage holders are simply handing over there keys to the banks and walking away.

One Spanish bank employee stated on a site that the Spanish banks have been caught by supprise by the amount of people who are prepared to simply walk away from there loan commitments, spaniards would sell there cloths, live of bread and water at a relatives before defaulting on a loan to a bank.

Many Expats are returning to the UK in the hope that returning keys is enough to wipe off the debt and that Spanish banks would not spend the time or money to chase the outstanding balance once the bank has disposed of the property.

Spain may well have an issue close to the USA, not as big, but more Caja could fail, maybe even a Bank.

jdr

The whole world is in deep shit at the moment and nothing us normal folk can do about it.
We have been through it before and it sorted itself out, it is no good panicking, sit back and relax, I have lost 30% of my wealth and so has everyone else, so it`s just stalemate till the economy picks up and then it will be stalemate again but in a hopefully richer life.

steviedeluxe

According to the FT quite a few Spanish banks are in the world's safest 50 banks:

ft bank listing

I heard plenty of tattle on UK boards (mainly by posters who couldn't accept that in this arena Spain did things better) last year stating that Santander was next to fall, they weren't as safe as some were saying, the hedge funds were going to take them out etc. All tosh - in the end they made nearly 9 billion profits. It's got nothing to do with one nationality being better at banking than another. The rules and standards that Spain had to introduce after the Banesto scandal of the early 90s is perhaps more the reason.

However it's quite possible for the major banks to be fairly stable, whilst everyone else in the economy has a hard time (remember the 80s and early 90s in the UK?). If I had money in a Caja (or a UK bank for that matter) I'd try my best to find out what the worst case scenario would mean - is the government liable for refunding the money?

Incidentally, there's even talk of green shoots in the Spanish economy
job market improving?. I can't see this happening in such a short time scale, but who am I to argue with a politician?

steviedeluxe

Maybe it's the "expat benefit cheats" holding up the Spanish economy?

bbc report

Lol. Does Gordo and his govt. really think that reports like this will cause us to forget all the billions needed to prop up the banks (or even the MPs' expenses scandals?)

bigglesworth

Unfortunately, when the Government is issuing over £ONE BILLION of gilts every single working day, and has plainly abandoned any meaningful attempt to balance the books, pensioners are an easy target - because they have cash. (not a lot, but hey, for a profligate government every little bit helps).
And this bunch of crooks regards pensions as their very own piggy bank.
So expect more posturing vilification of vulnerable sectors.

livit

There are more banks in Spain than Santander.

Banco Bilbao Vizcaya Argentaria SA (BBV) said fourth-quarter net profit fell 62%, while Banco Popular Espanol SA's (POP.MC) profit tumbled 72%. Banco Santander SA's (STD) profit fell 22%, and the top Spanish savings bank, La Caixa, fell 65%.

Caja Madrid is worst off among the big Spanish financial institutions, having seen its non-performing loans soar to 4.87% of total lending at the end of 2008 from 0.9% in 2007.