Wednesday, May 26, 2010

Spain bails out CajaSur bank

So, Spain has finally had to bail out one of their banks. The most surprising thing is that it has taken this long. The Spanish banks and Government have spent the last 2 years maintaining that they were in a better state than all the other countries that have bailed out banks etc. It has been clear to see though, from the state of the construction sector, and employment, that the banks in Spain, particularly the Caja's, were sinking under a sea of real estate debt and non performing loans and mortgages. So now, Spain is having to bailout CajaSur, almost two years after Northern Rock and the US banks, and with the situation of Greece etc so much worse. So rather than being better off, Spain is in a worse state, and 2 years behind........

Thursday, May 20, 2010

Spain's new age of austerity

The Spanish government has approved a 15bn-euro ($19bn; £13bn) austerity plan to rein in the public deficit and ease fears of a Greek-style debt crisis. Many Spanish jobs enjoy 13 monthly salaries, as many Greek civil servants had a 13th and 14th monthly payment.
The programme is intended to reduce a deficit of 11% of GDP to 6% by 2011.
The plan, unveiled last week by PM Jose Luis Rodriguez Zapatero, will involve a 5% cut to public sector salaries.
Many Spaniards fear the effect the cuts will have on the economy, where the unemployment rate exceeds 20% - twice the eurozone average. There must be so many families struggling to pay mortgages and spend in the economy.
There was some economic cheer last week, when statistics showed Spain had moved out of recession in the first quarter of this year, with growth of 0.1%. In Spain over the weekend someone remarked to me that the Spanish have now spent most of their "mattress money" that they had following entry into the euro, and that many had acquired selling land or doing "black" real estate deals.
The European Union has been anxious to see more fragile European economies including Spain, Portugal and Greece impose tougher austerity measures.
This month, the EU approved a 750bn-euro rescue package to prop up European economies struggling with large debts.

New Malaga Airport, reflects the mood in Spain

We just flew in and out of Malaga airport, where the magnificent new terminal building is a gleaming glass and steel construction.....from the outside.
Inside it's like the mood in Spain, grey and dreary. How did they make a new airport so miserable ?
Named after Pablo Picasso, there isn't much of the inside that is colourful or artistic.
What's worse is the way we were treated there, we came away feeling like we had walked a mile and been scammed on the way!
First of all we checked in at the old terminal desks, but instead of walking through the back into security, they made us walk all the way to the other end of the new terminal building, where they have temporary security desks setup. Then, we found that our gate was all the way back in the old terminal.
the upshot of this is that you have to walk all the way through the departure area of the new building, in order to get back in the old building, and past all of the new shops and bars and restaurants.
We basically walked for ages for nothing.
And the whole "no liquids" over 100ml feels more and more like a scam each time we go through security. Since the restrictions the airport bars and restaurants in departures must be laughing all the way to the bank. €2.95 for a bloody diet coke - absolutely fucking shocking
It has always felt to a degree that Spain has been happy to fleece the foreigners. Given the shit that the country is in right now, theyshould think again....

Wednesday, May 12, 2010

Spain budget cuts

News coming from Spain of further proposed budget cuts in order to reduce the deficit. Timing would seem to be important, following on from the announcement of the 750bn euro bailout fund. I guess the eurozone wants Spain to be making promises of cuts, before the EU has to insist on levels of cuts, like they did with Greece. If Spain was caught dawdling in the wake of the bailout fund, then I think the markets woud punish them and send the shit into the fan, with borrowing costs going through the roof. Even Mr Obama has put his oar in, commenting specifically on Spain, and making a clear point that the US is taking careful note of happenings in Europe.
Quite what Mr Zapatero is going to do is another thing - spening cuts - which must include the loss of civil service lackeys, when the unemployment rate is already 20%, is going to hurt

Tuesday, May 11, 2010

Coalition of the losers

Now Nick Clegg has taken to standing on the street corner, in his best yellow hot pants, negotiating with both the Tories and Labour over which one he is going to shag

A Lab-Lib alliance, a coalition of the losers, just doesn't feel right

Imagine Man United, at the end of the season, doing a deal with Wigan and claiming to be Champions !

Power of the markets

So after yesterday's enormous gains on stock markets around the world, following the eurozone 700bn bailout deal, markets fall today because apparently markets are scared about it, and the French and Germans are still unhappy that they are underwriting the Greeks still

But where sis anybody think the money was coming from anyway. The eurozone is going to be propped up by money that they have borrowed from each other and themselves.

And also rumours that Greece and Spain are going to be downgraded further by Moody's

If the markets have it against you, then whatever you do, you don't stand a chance......

Monday, May 10, 2010

Fast track demolitions in Spain

As if things weren't bad enough for many homeowners in Spain, comes this story from yesterdays Sunday Telegraph

Owners of homes which are retrospectively judged to have fallen foul of regional planning rules can now be given just one month's notice that council bulldozers are being sent in, as part of a crackdown on excessive development in one of Spain's most popular regions.
Thousands of homes that were bought or built in good faith across the area are at risk since the regional authority began reviewing local councils' planning approvals - and concluded that in many cases, permission to build should never have been granted.

The threat of sending in bulldozers at short notice has horrified the estimated 5,000 Britons with properties in the hillsides of Almanzora, one of the worst affected areas 60 miles north of the coastal city of Almeria in southern Spain.
Hundreds of properties have already been served with demolition orders, but most homeowners had not felt under immediate threat because of Spain's slow-moving legal system. They believe that the fast-track demolition orders will change that.
"The fast-track orders could speed up the legal process and hasten demolitions," said Maura Hillen, who organised a mass rally against them in Malaga. To add insult to injury, after a demolition the victim would have to pay the municipality for the bulldozer.
"We are really worried about express demolition, because officials here have a habit of doing crazy things," she said.
The former IT specialist in the City of London, aged 46, has set up a group of Britons who, like her, have been given demolition orders. They are using skills from their former professional lives and funds raised from car boot sales to pay for their campaign.
They call themselves the "Albox 8", after the small town where they live, whose population has risen from 15,000 to 22,000 over the last decade. Builders and property developers prospered as new villas sprouted during a four-year property boom that began in 2000, and local officials praised the foreigners who brought money to the impoverished region. Almost overnight, on dusty roads where there had once been plodding donkeys, newly rich farmers were driving Mercedes limousines.
Then Spain's overheated property market was rocked by a series of corruption scandals, and the regional government began scrutinising permission granted by local council officials.
Half-built properties are thought to be at greatest risk of the new, prompt demolitions, putting people like John and Liz Brown, originally from Hampshire, into the firing line.
The whitewashed churches and almond groves seen from their villa make up the kind of spectacular view they dreamt of before they took the plunge and sold up in Britain.
But the couple have never moved into a property on which they spent £140,000, after a court order stopped construction before the windows were fitted. Since then they have fought a legal battle to be allowed to live there.
Now there is a real chance that officials will send in a bulldozer in the coming months to flatten the house on which they have spent their life saving, but where they have never lived.
"Spain is a lovely country with friendly people and a wonderful lifestyle but when it comes to law, this is the Third World," Mr Brown said, standing amid rusting cans and scattered breeze blocks where his swimming pool was supposed to be.
"It was always our dream to retire here and we worked hard to do it. But now I wish I had never bought a property. People in Britain who are thinking of coming here should know what they are letting themselves in for."
Other residents of the region were equally perturbed. Expatriates fear that any day an official could knock on their door with a legal order declaring their dream home was built without the requisite permission. Every time a JCB digger drives into the area there is panic.
The dashed dreams are particularly cruel for retired couples like the Browns - another member of the Albox 8 - who are too old to start again.
"We spent all our savings on this villa," said Mrs Brown, 60, a former driving instructor. "We can't go back to Britain because we have burnt our bridges and we haven't got anything left." Her husband has had cancer for the past year. Mr Brown, 72, is a former soldier and veteran of the Malayan campaign, who worked for British Airways before his retirement.
Some residents served with demolition notices have suffered stress-related illnesses and one, Muriel Burns, said she had been suicidal since being served a demolition notice just before Christmas.
Mrs Burns, 70, and her husband John, 82, originally from Batly in West Yorkshire, have pledged to handcuff themselves to the French windows and die together inside their tastefully decorated living room if the bulldozer comes.
The result has been crippling for Britons who in most cases bought in good faith, trusting Spanish property developers, lawyers and local officials to provide the correct paperwork. Most have been horrified to discover their houses may lack the necessary permission.
Juan Espadas, the former housing and town planning minister for the regional government, defended the measure introduced during his tenure. "This express demolition law will only be applied in very illegal cases," he said. "In all cases the owners will have the opportunity to defend themselves."
Since the financial crisis hit, the expatriates' enviable lifestyle has been hit by a falling pound, negative equity, and a shrinking jobs market, on top of demolition fears.
"Half the British you speak to now are leaving or want to leave," Mr Brown said. "The way it feels here, the Spanish dream is over."

Spain out of recession, maybe.....

After seven quarters in recession, it seems that Spain may have finally crept back into growth, by a small margin - 0.1%.
Given that unemployment is so high in Spain it must be good news that the part of the economy that is working, is improving.
Along with this we can see that a deal has been agreed to hold a rescue fund for the eurozone, in the wake of the Greece crisis, that, it is hoped, will provide some security to other territories that are in danger of being punished by the financial markets and plunged into crisis.
But even though this seems to be having the required positive effect on the stock and currency markets around the world, the money still has to come from somewhere. The other eurozone countries have effectively stated that they will be supporting each other in case it looks like a single country cannot meet it's debt obligations.
The worse thing about this, potentially, is that the most at-risk countries - the famous PIIGS, of Portugal, Ireland, Italy, Greece and Spain, will just carry on with their old ways, in the knowledge that they will be bailed out.
Anybody that knows Spain, will know that there needs to be substantial reform in a number of areas, including employment, tax law (where evasion and black money is still rife) and property.
Consider the various complicated tax laws and costs surrounding the property and mortgage markets, and how they could be simplified to kick-start the Spanish property and Spanish mortgage markets. The combined costs of buying a property in Spain with a mortgage, can often add up to about 14% of the purchase price of a property, which is plainly ridiculous. How much would the construction and property industry benefit from getting rid of most of the stupid taxes ?
Spain is full of empty and unsold property at the moment, which the indiginous population - the younger, next generation of property buyers, simply cannot afford at the moment. If you remove some of the taxes, then the youngsters will be able to leave the family home and buy their own place.
Also, losing the taxes would certainly have an impact of attracting more foreign buyers, including Brits, back to the Spanish market.
A small growth does not mean they are out of the woods, there is still much that could be done.

Friday, May 7, 2010

Well Hung

So, as of now, we don't know who is going to be PM, or indeed the main party in charge of running the country.

Sterling is down 3 cents against the euro and the markets react strongly to the idea that nobody will be able to agree with each other on the best way to move forward and handle the deficit.

Something needs to be agreed asap so that we can start to implement some measures to sort out the economy. Given the uncertainty happening in Greece and the Eurozone, we could benefit greatly from decisive action.

The cost of Greek and Portuguese debt continues to rise, so it looks increasingly likely that Portugal is going to require some form of bail out

For overseas mortgage holders, the continued weakness of the pound, is of concern, and it must be said that the state of the economies in these countries will undoubtedly have an impact on the owners of holiday properties there.

Tuesday, May 4, 2010

Spain Bailout rumour

Apparently a rumour is doing the rounds in financial markets that Spain will need a bailout to the tune of 280 billion euros. This comes after the Greek rescue package was thrashed out at 110 billion over the weekend.
This is being strongly denied by Spain , as it could easily cause damage to the markets and may be a ruse to enable some financial dealers to make a quick buck.
But in many things in life, there is no smoke without fire, and very often rumours have at least some element of truth to them.
So we wait and see what is going to happen with Spain. On the face of it, Spain is maintaining that it's situation is a lot better than that of Greece, which, if true, would make a bailout of that magnitude seem unlikely