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Spanish Unemployment Rate Hits 17.9%

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http://business.timesonline.co.uk/tol/busi...icle6726119.ece

Spain’s unemployment rate hit 17.9 per cent during the second quarter of the year, the highest since the last three months of 1998, it was confirmed today.

The number of unemployed people rose by 126,700 to 4.14 million during April, May and June — taking the Spanish jobless rate to more than twice the EU average and confirming it as the continent’s unemployment blackspot.

It means that, compared with the same quarter in 2008, a further 1.76 million Spaniards have lost their jobs.

However, the figures were not quite as bad as some economists had expected, prompting speculation that Spain — whose economy has been rocked by a property crash — may be past the worst.

They had predicted the jobless rate to hit 18.5 per cent in the quarter and said the lower figure could suggest that the second phase of the Spanish government’s emergency €18 billion package to stimulate the economy, launched in May last year, might be working.

The proposals saw €10 billion worth of tax rebates for individuals and businesses last year and a further €8billion worth of measures, including tens of thousands of new infrastructure projects, this year.

Xavier Segura, analyst at Caixa Cataluna bank, said: “Although the rate of unemployment growth is still intense, we are seeing a significant slowdown. This could be due to seasonal factors such as the Easter holiday week having fallen in April this year and the Spanish government’s infrastructure investment plan.â€

Dominic Bryant, economist at investment bank BNP Paribas, said: “The worst is probably passed after this second-quarter data in terms of the rate of increase. Perhaps the government’s economic schemes are having more of an effect than people expected.â€

But Martin van Vliet, economist at ING Bank, warned: “I’m a bit flabbergasted by the small rise in unemployment. I still fear this will turn out to be a temporary breather, largely reflecting the impact of government stimulus.â€

Nearly three in every 10 unemployed people in the Eurozone now live in Spain, with the jobless rate as high as 25 per cent in some parts of the country, including Andalusia and the Canary Islands.

What are the personal debt levels like in Spain? I'm surprised there banks aren't under huge pressure with this level of unemployment.

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Spain has always had high unemployment.

I remember in the 90s the argument was that it was utterly impossible to sack any permanent staff, but I don't know the situation now.

Citigroup-Spain-Forecast.gif

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Spain has always had high unemployment.

I remember in the 90s the argument was that it was utterly impossible to sack any permanent staff, but I don't know the situation now.

Citigroup-Spain-Forecast.gif

Interesting graph, although it's had high unemployment during boom period in the global economy, what's going to happen if we are in a global depression? Or are the Spanish more honest about collecting unemployment data unlike our fiddled figures.

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Interesting graph, although it's had high unemployment during boom period in the global economy, what's going to happen if we are in a global depression? Or are the Spanish more honest about collecting unemployment data unlike our fiddled figures.

Yes I think the Spanish figures are closer to the truth regarding actual unemployment. Here in the UK we are in total denial. The system pushes people from JSA onto the sick etc. Young people are training towards non-existant jobs too. What is the tipping point that a country requires in terms of the ratio of those working as opposed to those who aren't? This is particularly important as regards to pension provision. Whatever the answer is you either have to have more people working or else tax those that are even harder. We shall probably have to print loads of money - the problem with giving it to the banks though is that they'll just keep hold of it to restore their balance sheets. Our economy is driven by debt and consumption. If we stop consuming more jobs will be lost.

Edited by crashologist

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Nation fail.

The Spanish are interesting to me, they really don't seem to mind that much, having like 30% youth unemployment or maybe higher. Maybe if you live on those beaches, as long as you have enough food to eat and a roof over your head, you don't really care.

From reading history in Northern European nations when unemployment gets this bad, it becomes a very serious political issue.

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Our economy is driven by debt and consumption. If we stop consuming more jobs will be lost.

Yes that is why tough it out and save up isn't really an option. It is a good idea on an individual level, but if everyone does it, then busiensses all have to lay people off til they reach the new level of consumption.

Edited by aa3

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Hearing lots of Spanish being spoken in my home town at the moment - wonder if they're starting to look for work outside Spain?

There're hundreds more than usual (kids, though) in Brighton doing EFL courses.

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http://business.timesonline.co.uk/tol/busi...icle6726119.ece

What are the personal debt levels like in Spain? I'm surprised there banks aren't under huge pressure with this level of unemployment.

I don't know the actual figures, but it is harder to MEW in Spain, and BTL mortgages don't really exist. Up until a decade a go people would pay off their mortgage in maybe 10 years and then buy a second home in the countryside/beach, and then pay that off in 10 years. During the boom banks would perhaps have allowed people to have mortgages on two properties at a time, but it was never like the UK. Also FTBs were taking out 10x mortgages, over 35 or 40 year repayment terms. They will be seriously phucked.

Yes the Spanish banks are under huge pressure. It just hasn't come to a head yet.

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There're hundreds more than usual (kids, though) in Brighton doing EFL courses.

The weak pound is making the EFL courses good value for money at the moment. However the Spanish people I know in Brighton tell me there are fewer Spanish people living there permanently - again possibly because of the weak pound.

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Spain has always had high unemployment.

I remember in the 90s the argument was that it was utterly impossible to sack any permanent staff, but I don't know the situation now.

The situation is exactly the same.

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Guest spp
Nation fail.

The Spanish are interesting to me, they really don't seem to mind that much, having like 30% youth unemployment or maybe higher. Maybe if you live on those beaches, as long as you have enough food to eat and a roof over your head, you don't really care.

From reading history in Northern European nations when unemployment gets this bad, it becomes a very serious political issue.

Good point!

I've been thinking on the same lines. A beach life without all the materialistic BS (on debt causing inflation for those who save) and social mess we get these days in the U.K, is sounding very appealing.

I'm soon to depart on a 2-6 month tour of OZ to decide for myself. If lifestyles are soon to take a turn for the worst, i'm sure a life in the sun would be a far better place to be than already grey, dull, summerless U.K.

I will also be spending a few days in dubai to witness firsthand the effects of all this paper money flying around.

Time to get out of the rat race maybe!?

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http://www.worldproutassembly.org/archives...ehold_debt.html

Household debt rose above disposable income in Spain for the first time in 2004. Borrowing in Spain has tripled in eight years. The cause is skyrocketing house prices which have risen by 150 percent since 1997. An average mortgage is $147,000, a figure stimulated by high employment levels, low interest rates and demand by northern Europeans for homes in Spain - a country regarded as the California of Europe. Already signs indicate prices will come down - which would bankrupt thousands of people overnight. As always, it is the poorest families who will suffer the most in these precarious economic times!

By Keith Lee

12 July 2005

The financial debt of Spanish households has soared, according to the Bank of Spain. Household debt rose above disposable income for the first time in 2004, up from just over half in 1997. Borrowing in Spain has tripled in eight years, rising from �200 billion ($240 billion) in 1996 to reach record levels of �595 billion�equal to 74.5 percent of the country�s gross domestic product.

The bank blames the debt mainly on the rising cost of buying a house in Spain, where prices have skyrocketed by 150 percent since 1997. The average cost of a mortgage is now �124,000 ($147,000) whilst the average wage is �1,400 per month. It warns that many Spaniards are wagering their future well-being on the hope that property prices continue to rise.

The bank calculates that house prices in 2004 were overvalued by 35 percent and warns that Spanish households have now become �more exposed to certain macroeconomic or idiosyncratic shocks, such as those caused by changes in interests, asset prices or household incomes� and that rising household debt could impact on Spain�s competitiveness.

It points out that the housing boom was stimulated by relatively high levels of employment, low interest rates, increased access to credit and demand by northern Europeans who regard Spain as the California of Europe.

There could be a slump in house prices if interest rates continue to rise, economic growth slows in Spain, EU subsidies dry up as they are diverted to Eastern Europe and Spanish families reach the limits of their ability to borrow money. The Economist notes that the ratio of house prices to income in Spain (average house price divided by average income) is already at its highest level ever and 68 percent above its long-term average. In the United Kingdom, Ireland and the Netherlands the average is 50 percent and in the US it is 23 percent. There are also more than 3 million empty new homes in Spain and owners may try to sell them as they realise that prices are about to come down, causing a further drop in prices.

If there is a plunge in house prices, many people would become bankrupt overnight. This would hit Spain particularly hard, as it has one of the highest rates of owner-occupancy in Europe, standing close to 90 percent.

The massive rise in house price rises is not confined to Spain, but is part of a global phenomenon. According to the Economist of June 16, the total value of residential property in developed economies has almost doubled in the past five years to over $70 trillion. It says house prices have risen much more in real terms than during any previous boom and that they have increased relative to incomes and rents. The magazine calls the current situation �the biggest bubble in history,� dwarfing the US stock market bubble of the 1920s and the 1990s boom which ended in the dot-com crash in 2000. In an attempt to offset that crash, the US Federal Reserve and other central banks cut interest rates to historically low levels�thus stimulating the housing boom.

These figures are from a few years ago.

http://www.newser.com/story/39685/spains-d...nto-paying.html

Oct 11, 08

As personal debt grows in Spain, debt-collectors are taking the trick-or-treat approach, donning costumes—tuxes, bagpipers’ gear, Pink Panther suits—and knocking on doors. If all goes as planned, neighbors take note and the debtor is embarrassed into paying, the Wall Street Journal reports. “The idea is to make the delinquency public," says one collector. "We have our professional uniform like anyone else.â€

This year has been a rough one for the Spanish economy after years of rapid growth and heavy borrowing; bank-loan defaults hit their highest in a decade in July. Debt-collection firms are flourishing as a way around a clogged court system. While some groups have arisen to fight what they call “bullying,†things could be worse. “We've heard of debt collectors using live bears in Russia,†said a consumer advocate in Britain.

People can only pay if they have the money, shaming only works if they have the cash.

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Maybe the Spanish economy is about to turn a corner. It appears Lord (Sir) Alan Sugar thinks so - he's buying up Spanish hotels:

Lord Sugar Spanish hotels

"If it's the difference between people renting the room or not, I'll stick a bloody fan in it. And if they say they want bright pink spots on it I'll do that too. What's the use of me banging my head against a brick wall and saying, 'You don't need the damn fan, sunshine'?"

Edited by CrashConnoisseur

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