Where is Spain’s growth going to come from? In the last decade it seems to have come mostly from property/construction.
More austerity to come over the next three years, 20% unemployment already, a debt to GDP ratio that is climbing rapidly and they are also still in denial about both their property bubble and the state of the cajas. They haven’t really done anything about either.
Sounds to me a little like there is some whistling past the graveyard going on here.
Is the biggest issue for Spain not the fact that the banks have taken all the distressed property from the developers and put it on our own books and by not having to mark down the prices their books still look in good shape. The property crash has been minimal in Spain because of this, their house price index is drawn up by estate agents and is based on how much the estate agents think properties are worth. And with the Spanish public fooled and the banks giving loans to anyone that will take these developments of their hands this is going to dry up eventually, the banks will keel over but will or can the Spanish government save them.
I bought in a large in town Spain in the mid/late 90s. Prices had gone up enormously previous to that, EAs were springing up everywhere, and prices continued to climb.
I looked to sell a few years ago, but had no takers at the price we looked for. No offers even.
The last time I looked in an EAs window in the town, asking prices were much the same as in 2006. EAs going bust all over the place. In fact, the EA I originally bought through had disappeared when I wanted to sell. I googled him, and found he had been done for tax evasion!
The collapse of Spain will be the catalyst for wholesale quantitative easing by the ECB. Until then, nothing except harsh austerity for the peripherals.
Wholesale means upwards of a trillion Euros of money created out of thin air by the ECB. It won’t be inflationary because it will be used to fund the wholesale restructuring of PIGS debt, neutralising their debt deflation.
Knowing its own vulnerabilities, France will get cold feet and side with Spain and Germany will be left to whistle in the wind.
And yes, Spain will fail. It can’t possibly get through this. It’s insolvent. Spain’s failure will be our salvation.
With Portugal gone the markets now get to concentrate fulltime on Spain, the big fish. Collapse happens sometime next year.
Invested heavily in oil fields in Latin America and North Africa when Ireland was investing in property rackets around the World.
Huge Gold reserves compared to our Ratner collection.
Their Public Sector workers earn in a month what ours earn in a week.
The dole is based on the previous amount of time the claimant has worked. Then stopped.
Less money going out, more money coming in than ourselves.
It’s complex, but the best analogy I know is that of the behaviour of packs of carniverous predators (hyenas, dogs, the big cats) who select and then systematically pick off members of a host population which exhibit some weakness. Without such weakness, the predators are usually unable to effectively complete a kill, and can easily suffer debilitating injury or waste precious energy resources.
In ecosystems, they render the host population a service by eliminating sub-standard performers from the group, ensuring that available resources are not wasted. In the event that the weakness is due to regressive genetic mutations, this is a boon to the host population, by preventing the subsequent propagation of those defective genes. It’s quite a stretch, and quite unscientific, but by analogy, targeting the weakest members of the Eurozone, you help purge “unhygienic” behaviour.
How does all the recent chatter about a greek default work then…would it be similar…do you think defaults would be managed by the ECB in such a way to give the market time to sort out write downs in greece etc…or would it be a free fall in countries with distressed sovreign debt?