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S&p Downgrades Spain

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http://www.telegraph.co.uk/finance/financialcrisis/8826163/SandP-downgrades-Spain.html

The move comes as politicians in Slovakia finally voted to expand Europe's bail-out fund, ending a nail-biting stand-off that threatened the Greek rescue mission and rattled global markets.

S&P expects the Spanish economy will grow at about 1pc in real terms next year, down from the 1.5pc pace it forecast in February.

In downgrading the Iberian nation, S&P cited growing challenges for Spain's private sector as it seeks fresh external financing to roll over high levels of external debt.

S&P now rates Spain at AA-, three steps below the top AAA rating. Its outlook is negative.

Still at least the Spanish won't be bailing out the Greeks....

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http://www.telegraph.co.uk/finance/financialcrisis/8826163/SandP-downgrades-Spain.html

Still at least the Spanish won't be bailing out the Greeks....

I would not want to be the new Spanish government coming in to power in November. It is pretty amazing how effective the propaganda of the current administration has been. This really shows in the spread between Italian and Spanish debt recently.

The reality seems to be somewhat different, new jobless claims doubling y/y in September (48k – 95k, +250k total y/y), the PMI surveys have been abysmal for the last couple of months with new orders plunging suggesting further downside. The manufacturing PMI is only 0.5 points above Greece.

Mortgage approvals hitting a record low in July, Housing sales plunging 38% y/y and the Tinsa index showing prices plunging at an accelerating rate. Whilst industrial production rose slightly in August this may be because of a SA problem (an extra day in the figures?). Also in the FT today the deficit is looking to be at least 1% over target this year.

A vicious recession seems to be on the way, the housing market is heading over a cliff and the effect this will have on the Spanish banking system and sovereign should not be underestimated. Spain increasingly looks like the next Greece to me, if the new government confesses the collapse could come hard and fast.

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I would not want to be the new Spanish government coming in to power in November. It is pretty amazing how effective the propaganda of the current administration has been. This really shows in the spread between Italian and Spanish debt recently.

The reality seems to be somewhat different, new jobless claims doubling y/y in September (48k – 95k, +250k total y/y), the PMI surveys have been abysmal for the last couple of months with new orders plunging suggesting further downside. The manufacturing PMI is only 0.5 points above Greece.

Mortgage approvals hitting a record low in July, Housing sales plunging 38% y/y and the Tinsa index showing prices plunging at an accelerating rate. Whilst industrial production rose slightly in August this may be because of a SA problem (an extra day in the figures?). Also in the FT today the deficit is looking to be at least 1% over target this year.

A vicious recession seems to be on the way, the housing market is heading over a cliff and the effect this will have on the Spanish banking system and sovereign should not be underestimated. Spain increasingly looks like the next Greece to me, if the new government confesses the collapse could come hard and fast.

Cant disagree with any of that small apartments /quads seem to have bottomed out but the large/medium villas are at unimaginable prices especially inland most people here are working cash in hand now , Repossessions are being stepped up , only small bit of goodish news is the Costa s are seeing many more visitors than last year with Norwegians taking a like to the areas near the coasts.

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Cant disagree with any of that small apartments /quads seem to have bottomed out but the large/medium villas are at unimaginable prices especially inland most people here are working cash in hand now , Repossessions are being stepped up , only small bit of goodish news is the Costa s are seeing many more visitors than last year with Norwegians taking a like to the areas near the coasts.

But are the Repos being put on the market.. or are the banks sitting on them (or selling them to themselves at inflated prices) to stop price discovery.?

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Do any of these ratings actually mean anything?

For instance are any of the hideously indebted countries in the western world rated a D- or an F++?

It all seems to be AA- or AA+ apparently though this a really big ******ing deal that they're not rated AAA+++ anymore.

I gather these are the same rating agencies (S&P, moodys, fitch et al) who rated certain CDS derivatives as AAA+++ gold-standard-top-notch-cant-ever-lose-with-these-ones-no-siree when they were infact bundled up with Subprime toxic junk debt with no hope of ever being serviced.

When the agencies were questioned on this in the official enquiries to the 08 collapse they said their ratings were merely "their opinion".

Why the ****** do these ratings mean anything to anyone? What am I missing here :blink:

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But are the Repos being put on the market.. or are the banks sitting on them (or selling them to themselves at inflated prices) to stop price discovery.?

Problem in Spain is there is no escape from your mortgage, even if you default the property is auctioned if the amount does not cover the mortgage you still owe the bank and become a debt slave.

Whilst in the short term this may provide support to the market it will also prevent any kind of recovery long term. Who would take out an inescapable debt in a plunging market, when friends and family are in debt servitude already?

Banks may also be hiding non performing loans, the cajas that were taken over by the Bank of Spain have double the non performing construction loans of the cajas that have not had there books examined.

With the economies of Northern Europe also in the toilet like us in the UK, the traditional foreign market for Spanish properties is also very depressed.

Mortgage defaults in Spain have been very low so far 2.5%~, I think in the next 12 months this rate will begin to rise, the unofficial economy will grow to prevent wages from being garnished, emigration will rocket and Spain will turn in to a much larger version of Ireland without the predatory rate of corporation tax.

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Do any of these ratings actually mean anything?

For instance are any of the hideously indebted countries in the western world rated a D- or an F++?

It all seems to be AA- or AA+ apparently though this a really big ******ing deal that they're not rated AAA+++ anymore.

I gather these are the same rating agencies (S&P, moodys, fitch et al) who rated certain CDS derivatives as AAA+++ gold-standard-top-notch-cant-ever-lose-with-these-ones-no-siree when they were infact bundled up with Subprime toxic junk debt with no hope of ever being serviced.

When the agencies were questioned on this in the official enquiries to the 08 collapse they said their ratings were merely "their opinion".

Why the ****** do these ratings mean anything to anyone? What am I missing here :blink:

I believe C is the lowest, which effectively means Junk status. Greece (alone I think) has hit that level.

The significance of these rating agencies is the message they send to big investors - hedge funds, pension overseers etc - to steer clear of investing in this country. This makes it more expensive for those downgraded nations to attract cheap loans to finance their debts, thus perpetuating the downward cycle. It's basically confirmation of what those in the know are already aware of - like everyone know Bob's hopeless at maths and then to confirm it, he gets an F in his GCSE maths exam.

Given the unaccountable power that the ratings agencies have, the quality of their past gradings have been shocking though. The UK is still AAA!

Edited by rantnrave

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It's basically confirmation of what those in the know are already aware of - like everyone know Bob's hopeless at maths and then to confirm it, he gets an F in his GCSE maths exam.

Yes, though everyone else in Bobs class are cheats & also crap at maths, so everyone gets an A, yay !

(instead of Stelios who got caught cheating and can't cheat anymore, he gets a C. )

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I defence of Spain, even if they miss their 6% deficit target for this year by say 1%, the fact that they'd have significantly reduced it at all would be an achievement. Especially when you consider that they are constrained by the euro (unlike the UK).

I'm beginning to think Spain might get through this because it's public debt isn't really that high, and the main risk it faced was if the Spanish government was going to have to bail out its banks - but it's increasingly looking like they will either be bailed out by some kind of central eurozone fund, or the eurozone will split in some way. Either scenario would be better for the Spanish public finances.

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But are the Repos being put on the market.. or are the banks sitting on them (or selling them to themselves at inflated prices) to stop price discovery.?

Here's a few - just click on the bank's name,

linky

Interesting some of the banks featured e.g. Lloyds, Barclays BNP

Edited by spanman

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This subject is, undoubtedly, far more your area of expertise than mine!

Well it just seems to me that if hedge funds own portions of rating firms they maybe in a position to influence ratings that favour their own investments, or perhaps get them in advance. Not react afterwards to any ratings they issue.

You don't have a dog and bark yourself.

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I'm beginning to think Spain might get through this because it's public debt isn't really that high, and the main risk it faced was if the Spanish government was going to have to bail out its banks - but it's increasingly looking like they will either be bailed out by some kind of central eurozone fund, or the eurozone will split in some way. Either scenario would be better for the Spanish public finances.

Really?

That's the main bone of contention between France and Germany atm: Sarko is pushing for the EFSF to bail out French banks, Merkel is digging her heels in.

I think the scenarios you mentioned for Spain are definitely a case of "no way, Jose"

Edited by Deckard

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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