Jump to content
House Price Crash Forum
Realistbear

Spain Drops Economic Propaganda And Admits Its Awful

Recommended Posts

http://www.telegraph.co.uk/money/main.jhtm.../cnspain117.xml

Spain drops reassuring gloss as crisis deepens

By Ambrose Evans-Pritchard
Last Updated: 10:51pm BST 16/07/2008
Spain's finance minister Pedro Solbes has stunned the markets with an admission that his country faces the
worst economic crisis in its history
as the full effects of the property crash spread through the economy.
"This crisis is the most complex we have ever lived through given the plethora of factors on the table at the same time," he told Punto Radio in Madrid, breaking with past efforts to put a reassuring gloss on events.
Mr Solbes said the Madrid bourse had suffered an "earthquake", crashing 27pc since the start of June. He blamed the toxic cocktail of high oil prices, the global credit crisis and the sharp slowdown in the key export markets of North America and Germany.
The comments follow this week's bankruptcy of Martinsa-Fadesa, Spain's biggest corporate failure. The property developer - with an empire of housing estates, hotels, shopping malls and hotels - collapsed after failing to refinance €5.1bn (£4bn) of debts. The company's demise was a textbook story of aggressive over-expansion at the top of the cycle, driven by high debt gearing. It has €11bn of assets.

I wonder how much longer the "Place in the Sun" property programmes will continue on tele? How much longer can the Euro survive? Spain needs Japanese-style IR now while Jean-Claude ponders how many hikes will be required between now and winter.

Share this post


Link to post
Share on other sites

At last a senior politician admitting how bad it is.

Lower interest rates could make an appearance as the Germans know they are entering a recession so Trichet may get his orders.

The Euro is in real trouble, single interest rates where never going to work for such a diverse economic region. Now that theory is going to be put to the test. The best thing the ECB could do now would be to abandon the single interest rate and set rates for the regional level. The ECB seems determined to break the currency up. It's being reactive instead of proactive.

Share this post


Link to post
Share on other sites

Just goes to show, bank lending to support a boom means nothing.

If the lending was mostly useful, when it stopped, the good ship "economy" should float on its own volition.

Clearly this is not the case. Same here in the UK I very much suspect.

Share this post


Link to post
Share on other sites

You HPC doomsers have missed this bit:

"In reality, this is unlikely to be the worst economic crisis in Spain's history. Philip II defaulted on his sovereign debts three times in the 16th century after he bankrupted the Spanish Empire to pay for his Counter-Reformation wars against Protestants. He crippled the Italian banking system in the process - much to the benefit of London and Amsterdam."

And that was under the Tories - says Hazel Blears.

Edited by 29929BlackTuesday

Share this post


Link to post
Share on other sites

How refreshing, but potentially very nasty as Spain is far from being one country

Gordo-the-Ghastly will use this for blame shifting & spout:-

"Look at Spain. We are in a much stronger position to cope with the global downturn providing we have wage restraint".

Share this post


Link to post
Share on other sites
You HPC doomsers have missed this bit:

"In reality, this is unlikely to be the worst economic crisis in Spain's history. Philip II defaulted on his sovereign debts three times in the 16th century after he bankrupted the Spanish Empire to pay for his Counter-Reformation wars against Protestants. He crippled the Italian banking system in the process - much to the benefit of London and Amsterdam."

And that was under the Tories - says Hazel Blears.

I bet you got this off a Glasgow East by-election leaflet. :P

Share this post


Link to post
Share on other sites
You HPC doomsers have missed this bit:

"In reality, this is unlikely to be the worst economic crisis in Spain's history. Philip II defaulted on his sovereign debts three times in the 16th century after he bankrupted the Spanish Empire to pay for his Counter-Reformation wars against Protestants. He crippled the Italian banking system in the process - much to the benefit of London and Amsterdam."

And that was under the Tories - says Hazel Blears.

So, the worst economic crisis since the 16th century eh?

By my calculations, house prices are 1436743.412% higher than the 16th century.. you can't go wrong with houses!!! :lol:

Share this post


Link to post
Share on other sites
I did indeed!

Like your 1929-based name - how funny that our respective parents chose to name us in such a similar way!

1929Crash is just a pen name. My real name is Conway Stuart. :lol:

Share this post


Link to post
Share on other sites
At last a senior politician admitting how bad it is.

Lower interest rates could make an appearance as the Germans know they are entering a recession so Trichet may get his orders.

The Euro is in real trouble, single interest rates where never going to work for such a diverse economic region. Now that theory is going to be put to the test. The best thing the ECB could do now would be to abandon the single interest rate and set rates for the regional level. The ECB seems determined to break the currency up. It's being reactive instead of proactive.

I am not saying you are not correct about single interest rates. I happen to agree with you. The same argue could be made for America, and the 51 states. Some states have chronic problems...like Californias bankruptcy.

But I guess single interest raten policy has worked for them..I mean look at how healthy the USD is :lol: ...er opps, oh no thats right :lol:

Share this post


Link to post
Share on other sites
So, the worst economic crisis since the 16th century eh?

By my calculations, house prices are 1436743.412% higher than the 16th century.. you can't go wrong with houses!!! :lol:

you have failed to take into account the free kitchen appliances and garden landscaping/ wireless doorbells, available in todays executive housing

Share this post


Link to post
Share on other sites
Just goes to show, bank lending to support a boom means nothing.

If the lending was mostly useful, when it stopped, the good ship "economy" should float on its own volition.

Clearly this is not the case. Same here in the UK I very much suspect.

that is totally true, and the main reason why all the cries for lower interest rates for Spain are in vain, and it's not necessarily a bad thing that they don't get them.

as we are seeing, artificially low rates DON'T really keep a crash from happening, and ultimately end up paralyzing the country through massive inflation.

there is really no good cause for Spain to follow in Britain's footsteps, and in the long term, they would probably better off if they RAISED rates.

Share this post


Link to post
Share on other sites
The Euro is in real trouble, single interest rates where never going to work for such a diverse economic region.

Why not? They work for other big countries? Oh yes, those are countries, aren't they, which would mean the Euro could only work if it was intended to be the currency for a single country.... Shurely not, our political lords tell us this is not the agenda. :rolleyes:

Share this post


Link to post
Share on other sites
I am not saying you are not correct about single interest rates. I happen to agree with you. The same argue could be made for America, and the 51 states. Some states have chronic problems...like Californias bankruptcy.

there are a lot of really very fundamental differences between the single currency area of the US and the Eurozone. off teh top of my head

* A central government - this is clearly a massive difference!

* A common language

* A common heritage and culture - they are all one country

* Huge numbers of important and overriding Federal laws - states' own different laws are less important

* Less 'history' (OK maybe the Civil War :unsure: )

I don't think it's comparable to be honest. I have heard people talk of the dollar across lots of states being a good reason why we can safely join the Euro - i simply don't agree.

Share this post


Link to post
Share on other sites

The Euro is a strong currency and will survive but the countries with flaky economies like Italy and Spain will have to leave soon...

These countries have always had inflation built into their economies which was previously offset by their depreciating currencies...............but since they've been in the euro there has been no devaluation option......since 2001 Spain has become 20% less competitive vis a vis Germany because wage growth there has outstripped productivity growth much more than in Germany

Share this post


Link to post
Share on other sites
love your sig by the 29929.quite right.short inflationary spike and then relentless deflation

Thanks reaper - I have decided on that after reading many many books on the subject. Of course I may be wrong but it seems most likely. This isn't an attempt at a 'flation thread btw!

Talking about our names on here, are we supposed to have false ones? If so I'd better change mine as 29929blacktuesday is my Christian name.

And yes, I know it's one month BEFORE 29/10/29 which is the real date but that was the point ie one month before it hit big time and shoe-shine boys were giving share tips!

Share this post


Link to post
Share on other sites

I guess the Barcelonians and the Madridniks are having a rough time. Don't they have lots of houses that they can sell to prop up their failing economies?

HAL

Share this post


Link to post
Share on other sites
Guest sillybear2
Talking about our names on here, are we supposed to have false ones?

I dunno, are we? I'd better change mine to something else then! Guess what my older brother is called?

Share this post


Link to post
Share on other sites
I dunno, are we? I'd better change mine to something else then! Guess what my older brother is called?

Is it reallysillybear2?

Share this post


Link to post
Share on other sites

The Germans and the French never wanted the latin countries in the Euro in the first place. They had to do so because of politics. Kicking them out, or better yet getting them to leave by their own choice is the best thing that could happen for the Euro. The latin countries were always poor at controlling their finances before the Euro and they had high government bond yields and interest rates as a result. All that happened with the Euro is they got lower interest rates based on German levels. They then went on a spending spree as they are irresponsible. So now they leave, they will still be irresponsible.

When you spend more than you tax the difference can come from two sources. You borrow both domestic and overseas, or you create new money out of thin air to pay for it. In creating new money, you create inflation. First user, the government, gains the advantage but prices rise to reflect the new quantity of money. It is a tax, firstly by the new money, then by capital gains tax's on the assets that rise with inflation. The other source of funds, from savers, will only buy if they can gain a competitive return above inflation.

Thus if they leave and set up a new currency with zero interest rates, it will be born into high inflation. All savings will flee the country further reducing liquidity. More printing will result in yet hyper inflation and a worse mess than now. It would be easy to make money by borrowing pesetas and converting to euros, then just sit on the zero interest loan while the the peseta tanks. Then sell some euros to pay back the loan.

Share this post


Link to post
Share on other sites
Why not? They work for other big countries? Oh yes, those are countries, aren't they, which would mean the Euro could only work if it was intended to be the currency for a single country.... Shurely not, our political lords tell us this is not the agenda. :rolleyes:

They don't even work for big countries.

The single interest rate theory is about as good and reliable as the theory that house prices only ever go up ;)

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 399 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.