Wednesday, May 16, 2007

Full steam ahead into depression for spain

Spain risks crisis over vanishing reserves

Spain's foreign reserves have plummeted to wafer-thin levels, leaving the country exposed to a possible banking crisis if the property market swings from boom to bust - despite membership of the eurozone.

Posted by sold 2 rent 1 @ 08:32 AM (676 views)
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10 thoughts on “Full steam ahead into depression for spain

  • I think the direction of the Spanish property market has already been established

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  • This is just the start of their problems , as once the ECB start raising rates to the 4% target the property market will be on its knees with the big problem of many in the UK taken out loans in Euros to pay for the Oversease Properties or to renovate them.

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  • A quote from the article: “It appears the bank has been draining the reserves to help finance the current account deficit, which has ballooned to 9.5pc of GDP, reaching €8.6bn in January alone.” Does anyone know what the UK’s current account deficit is as a % of GDP?

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  • A good find, thanks S2R1.

    I like “It appears the [Spannish Central] bank has been draining the reserves to help finance the current account deficit, which has ballooned to 9.5pc of GDP, reaching €8.6bn in January alone.” Does anyone know the UK’s current account deficit expressed as a percentage of GDP? I assume if we were in a similar situation, we’d just put interest rates up?

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  • Interesting, I always wanted to know what happens when most of a countries (percieved) wealth is in housing and people have over extended themselves with credit and house prices can only go up and money supply seems endless. Looks like Spain was a good testbed, it will hit the UK but not for a little while yet, just good to see there is a definite ending. Also another example of the ‘smarter’ Germans, working, saving and quietly waiting to profit from all of this mess.

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  • A lot of eu problems have the shotgun marriage of incompatible economies (into the single currency) at their core. Evidence of real benefits arising from the currency are notably absent.

    So who will be the first to leave?

    Italy has been a popular favourite, but the possibility of France throwing it’s toys out of the pram – blaming the euro for all it’s social problems and diminshing world influence – is very real. Now we have the interesting possibility of the Club Med countries pushing through adjustments that the Germans would find completely unacceptable..

    Interesting to watch..

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  • Things will have to get very bad indeed before any member state drops out of the Euro Zone. Nobody in mainstream politics is even suggesting the possibility at the moment, and it shouldn’t be forgotten that there would be a big practical downside.

    If there’s a recession, though, and things get really hairy – who knows?

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  • tyrellcorporation says:

    Aren’t there already areas of Germany and Italy where they are using their indigenous currencies and have ditched the Euro? One-size-fits-all IRs and monetary policy was never going to work – it’s always been a weird socialist centrist dream and a giant political fudge IMHO.

    Spain first, Ireland next! HOORAH!

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  • I’ve watched enough episodes of “A Place in the Sun” to know that the author of this article doesn’t know what he’s talking about!

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  • Talking Rot, think UK is 4.5% of GDP. NZ is usually the worst, currently about 9%.

    Here is proof that things are ok in the Spanish market: Episode 2 of current series……

    “Lora and John want to swap their weekends on the Isle of Wight for Andalucia in southern Spain, one of the sunniest places in Europe.
    They want to find an inland, rural property for their £80,000, but in this fast-moving market they have to move quickly or risk losing out. Amanda uncovers some great examples of what they can afford, but do they have the bottle to buy?”

    “Fast moving…….risk losing out”

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