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More Comedy From Spanish Banking System

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For those who don´t know him Edward Hugh is regarded as one of the most astute analysts of the Spanish economy. Here he picks up on Variant Perception´s report from last week.

http://spaineconomy.blogspot.com/2009/08/m...ing-system.html

Nobody at this stage knows if the Spanish banks can or will ride out the real estate crisis there. There appears to be a house of cards based on dubious property valuations. If it does collapse it will be severe and without warning.

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Now to put all this in plain English, we are talking here about the valuation of properties that are repossesed by the banks, and that the banks then have as part of their asset side, as goods awaiting sale. Now, Expansion raises the question: "how can we know that these assets are being fairly valued (that is how can we assess the quality of part of the asset side in the bank balance sheet) when the banks themselves own (directly or indirectly) nearly half of the companies doing the valuing.

I think it's because people are honest and will do the right thing.

Ponzi Brown does the right thing and he's brought us all economic recovery.

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For those who don´t know him Edward Hugh is regarded as one of the most astute analysts of the Spanish economy. Here he picks up on Variant Perception´s report from last week.

http://spaineconomy.blogspot.com/2009/08/m...ing-system.html

Nobody at this stage knows if the Spanish banks can or will ride out the real estate crisis there. There appears to be a house of cards based on dubious property valuations. If it does collapse it will be severe and without warning.

" If it does collapse it will be severe and without warning."

I take it then that your warning means that there cannot now be a collapse?

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" If it does collapse it will be severe and without warning."

I take it then that your warning means that there cannot now be a collapse?

Nah, people who want to believe in self serving nonsense will dismiss the warnings, probably also being snippy in some way whilst doing it.

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Not so, on balance I think it a collapse is more likely than not. The Spanish banks appear to be playing a very dangerous game holding on to ever more overvalued property. The scale of the problem, est. over 1 million unsold properties, will overwhelm them.

Only question in my mind is if the ECB will come to the rescue or let the market take its course.

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Nah, people who want to believe in self serving nonsense will dismiss the warnings, probably also being snippy in some way whilst doing it.

And after it happens they will then say "Nobody warned us - we need to set up an early-warning system". (Copyright © G. Brown, Year 0)

Edited by mikthe20

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