Is Eurozone heading for triple meltdown again ?

News stories and podcasts are very much focussed on happenings in Ireland and the reluctance of the Irish to accept an EU bailout except on their terms. In many of the stories, the subject of Greece often comes up, and we are reminded that that particular problem was very recent and still hasn't actually gone away. European bond markets are reacting badly to the news, which threatens to drag Portugal and Spain into the mire. The PIGS have long been identified as the EU's biggest problems, and it now seems likely that they could all be the receivers of some kind of bailout. Ireland could have a big knock on effect in the UK, as it seems that much of the debt of Irelands banks is held by UK institutions, so the debt malaise could spread.

Is Ireland heading for bailout ?

The pressure seems to be increasing on the Irish economy, amid signs that the country may be heading for a Greece style bailout, much to the chagrin of the Germans, who are frankly fed up with having to help the basket cases that they are lumped in with in the EU.
The Irish economy and people benefitted more than most from entry into the Euro, as house prices went through the roof. In Spain, it seemed that for every Brit buyer, there was an Irish buyer, quite extraordinary given the relative population sizes. Of course, lots of these Irish people that had taken equity out to buy in Spain and elsewhere, are now in negative equity at home, or having problems making payments, so there will be a likely knock-on effect on their holiday homes and investments in Spain, with Spanish mortgage payments likely being secondary in importance to the Irish mortgage for their main home. Given that the Spanish economy has stalled again, it's a double whammy that one of the nations that was so enthusiatic about investing in Spain is in so much shit too.....

Spanish Recovery stalls

Spain's fledging economic recovery came to a stop in the third quarter amid tough austerity measures, official data showed Thursday, hindering government efforts to slash the soaring jobless rate.
Gross domestic product showed zero growth in the three months to September 30 from the previous quarter, the National Statistics Institute (INE) said in a preliminary estimate.
It followed growth of 0.2 percent in the second quarter and 0.1 percent in the first when Spain emerged from one of its worst recessions for decades.
Spain, a member of the eurozone, has the fifth-biggest economy in the European Union.
A recession is defined as two quarters running of shrinking growth from output in the immediately previous quarter, so a month of zero growth is a cause of concern for policymakers.
The data also comes at a time of renewed concern in eurozone bond markets about high debt and low growth in weaker eurozone members Ireland and Portugal, following the Greek debt crisis earlier this year.
On occasions this year, Spanish bonds have also been affected by strains on the bond market where there is concern that austerity needed to control overspending could tip some countries back into recession, cutting tax revenues and adding to their problems in controlling budgets.
On a 12-month comparison, Spanish gross domestic product expanded by 0.2 percent after seven months running of declines by this long-term measure.
The government said the flat growth would impede its battle to slash the unemployment rate of more than 20 percent, the highest in the 16-nation euro zone.
"It is not possible to create employment" with zero growth, Employment Minister Valeriano Gomez said.
"Spain still needs to grow by 2.0 percent to create employment," he told Cadena Ser radio.
He forecast that employment would pick up in the second half of 2011, with an additional 40,000 and 50,000 jobs created in the year.
The INE said the latest figure reflects lower national consumption compared with previous quarters.
The figures confirmed estimates by the Bank of Spain last week, which forecast "a weakening of economic activity, of a transitory nature, due in large part to the depletion of some expansive factors."
"These include the impact on national demand of the budget austerity measures adopted in May," it added.
The government has suspended dozens of road and rail projects and cut civil servants' wages as part of deep spending cuts aimed at reining in the massive public deficit.
It has forecast the Spanish economy will shrink by 0.3 percent this year, following a fall of 3.7 percent in 2009.
In May it lowered its growth forecast for next year to 1.3 percent from 1.8 percent due to the impact of the tough new austerity measures.
The government aims to bring the public deficit down to 6.0 percent of GDP in 2011 and to the eurozone limit of three percent in 2013. The deficit hit 11.1 percent of GDP last year, the third highest in the eurozone after Greece and Ireland.
The measures were introduced at a time of rising fears that Spain and other southern members of the eurozone could follow Greece into a financial crisis.
The Spanish economy slumped into recession in 2008 as the bubble burst on a decade-long property boom and amid the global financial meltdown.
The INE is to release definitive figures for the third quarter on November 17.

An interesting house to rent

We just went house hunting at the weekend, looking for somewhere to rent. Our landlord in the UK has told us that he intends to try and sell our current abode when our contract expires, in August 2011. Yes that's right, August next year. In true style then, my GLW (good lady wife) has already started looking....
And what happens when you look for a house? - lo and behold, you find somewhere that you really like!
Anyway, the interesting thing about this house, is that it was owned by a builder that went bust, and is in major hock with the bank. So the bank have come in and finished the project, and are left with a property that "owes" them more money than they could comfortably recover with a sale.
So, rather than liquidate the loss, the bank (we don't know which one) has decided to become a landlord for a few years - I guess they can at least get some income and hold an "asset". So, we may have a bank as a landlord for a couple of years, as long as they drop the asking price enough that we can afford it - nice place though.........

More BTL mortgages available again in UK

A recent financial adviser confidence tracker report suggests that availability of buy to let mortgages in UK has improved.
As many as 43% of surveyed mortgage brokers said that the number of available deals increased in Q3 2010. Another 38% said they have not noticed any changes in the number of mortgage deals for property investors, and only 19% of respondents said the number of available loans fell.
The survey also found that 58% of mortgage brokers expect the situation on the market not to change significantly in Q4, whereas 35% hope it will get even better. The remaining 7% think the availability of buy to let mortgages will decline.
The report comments that the market has significantly improved in the past months, however, it still is not back at its pre-crisis level. Many professional buy to let landlords still find it hard to access loans.

Unemployment in Spain rises again

Unemployment in Spain, which has Europe’s highest jobless rate, rose for the third month in October as the economy struggles to recover from an almost two-year recession.
The number of people registering for unemployment benefits rose by 68,213, or 1.7 percent, from September to 4.09 million, the Labor Ministry in Madrid said in an e-mailed statement today.
Given that the construction industry in Spain looks to be well and truly screwed, at least for a few years, it's quite difficult to see where they are going to create many new jobs from. There aren't that many industries in Spain that have a true international appeal or weight, aside from a small number of high profile ones - Seat, Ferovial, perhaps.
And with this level of unemployment comes a double whammy on the eceonomy - higher benefit payments for all those people, and less spending in the economy, with loans and mortgages under increasing pressure.
Spain’s unemployment rate, double the European average, fell in the third quarter to 19.8 percent, even as Prime Minister Jose Luis Rodriguez Zapatero said the number should be viewed with “prudence.” The economic recovery probably slowed from July to September, Bank of Spain Governor Miguel Angel Fernandez Ordonez said on Oct. 5, as the government tries to slash the euro region’s third-largest budget deficit with the deepest austerity measures in at least three decades.

Back in austerity Britain.....

....I seem to have acquired another job to go with the, admittedly quiet, overseas mortgage broking, and the current day job in the music business. I am getting involved in an online gambling business to help out the owner, who is an old mate. So in a time of rising unemployment I could be working 3 jobs "to make the rent", as they say in the US. When things start looking up and the mortgage business starts flowing again I could be a very busy boy. Bring it on I say.

Sunny Spain

Just back from an enjoyable week in Southern Spain, where the fine autumn weather with temperature in the mid 20's felt a world apart from miserable grey Britain.

There still seems to be an awful lot of half finished apartments blocks, and the buzz that existed 3-4 years ago has well and truly gone. The building sites look even worse now the scaffolding and machinery has gone, and I can't see that they are coming back any time soon.

Part of the problem affecting sentiment in Spain still seems to be a complete mistrust of the banks and any official figures. The government says prices are going up, and the largest valuation company says they are going down. And the banks seem to be under suspicion of completely underdeclaring the true value of the repossessed properties on their books. We have friends with an apartment in Calahonda and the bank have completely stopped communicating with them, not chasing for money, not sending warning letters, or threats of repossession. They fully expect to lose the apartment, but in the meantime they are mortgage/rent free - they hav e no incentive to pay when the mortgage is higher than the purchase price would be for the apartment next door, it's an incredibly tricky situation.