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Trampa501

Spain Will Suffer Recession Less Than Other European Countries

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Newsweek interview

Spain's economic statistics are awful: 18 percent unemployment, a recession, and a big budget deficit. Is spain collapsing?

No. You just need to go out on the streets to see that it's not. The recession will be less than in other European countries. Our banking sector has avoided the crisis, and that will aid the recovery. Of course, the main problem is unemployment. Recovery will only take place when we create jobs. Our strategy is social protection and to reform the growth model to focus less on housing and more on innovative sectors like renewable energies and biotechnology.

But will there be a serious divide in Europe as countries such as Germany begin to recover while Spain takes longer?

No, because Germany's recovery helps us recover. Germany is the largest importer of Spanish goods, and German tourism is critical for our GDP. We will all come out of the crisis as we went in.

You thought Gordon Brown was deluded?

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I still think this Spanish song from 2006 parodied the lunacy of the property bubble better than anything else:

Me muero por vivir en un piso de treinta metros.

Para pagarlo, ningún problema, para eso están las hipotecas!

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they are well placed to weather the storm.

their Government are working hard doing the right thing.

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their Government are working hard doing the right thing.

Could be as I don't think(?) they are propping up property values with every tax-payer funded slight-of-hand their tax payer funded masters of spin can devise in order to make some tax payers feel better <_<

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Could be as I don't think(?) they are propping up property values with every tax-payer funded slight-of-hand their tax payer funded masters of spin can devise in order to make some tax payers feel better <_<

yellow card! too much tax in one sentence.

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Could be as I don't think(?) they are propping up property values with every tax-payer funded slight-of-hand their tax payer funded masters of spin can devise in order to make some tax payers feel better <_<

I'm afraid the Spanish government does prop up house prices. One way it does it is through placing an artificially high floor on the market through "pisos de protección". These are government subsidised flats for people under 35. Another way being considered is getting rid of tax breaks on mortgage repayments.

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I'm afraid the Spanish government does prop up house prices.

I'd assumed there was less interference than in the UK as 50% is talked of often. I was wrong; rare but it has been known.

http://www.investorsinsight.com/blogs/john...ance-sheet.aspx

1) Getting a boost from accounting changes

The Bank of Spain is thought of as a very conservative, prudent institution. That is true, but it is now changing its tune. It must now be very concerned for the fate of some Spanish banks and some analysts estimate it will help them avoid posting losses this year.

In July the Bank of Spain changed its provisioning rules on risky mortgages. Previously, banks have made provision for the full value of loans above 80% of a loan to value ratio after two years of payment arrears. Following the new directives from the Bank of Spain, banks now only need to reserve for the difference between the value of the loan and 70% of the property's market value. For many Spanish banks, this has allowed them not to lose money this year.

Source: http://www.ft.com/cms/s/0/adcd2d5c-725d-11...00779fd2ac.html

Source: http://www.economist.com/businessfinance/d...FTOKEN=62919779

2) Not marking loans to market

We also believe that Spanish banks are not marking their books to market. According to an article from the 19th of April in Expansión, the Spanish equivalent of the Financial Times, entitled 'Spanish banks control half of all real estate appraisals.' , Spanish banks control 25% of appraisals directly and another 25% indirectly through their shareholdings.

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