Tuesday, September 20, 2011

Spanish banks can’t go on like this

La morosidad del sector inmobiliario con la banca alcanza un récord con un 17,7% Late payment of real estate to banking to reach a record 17.7%

More than three years after the bursting of the housing bubble, banks have yet to digest the glut of building that was in the boom years. In fact, instead of improving, assets linked to this sector are deteriorating by leaps and bounds. As reported today by the Bank of Spain, delinquencies in the housing sector have risen in the second quarter by more than two percentage points to 17.8% of total mortgage debt. Widening the focus, loans more than three months in arrears have increased again in July for the fifth consecutive month. Arrears rose from 5.48% to 6.93% in June compared to the same month in 2010, which in money equals a total of 124,700 million euros.

Posted by drewster @ 12:55 PM (1162 views)
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3 thoughts on “Spanish banks can’t go on like this

  • Another story from Spain: rents are down on average 6% year-on-year. That’s not just a house price crash, it’s deflation.
    Bloomberg: Spain August House Rent Prices: Summary

    As John Stepek writes in today’s MoneyWeek: “What do you get when an unstoppable force meets an immovable object? I suspect the answer is: a big explosion and a terrible mess.”

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  • Its interesting to think what would have happened if Spain hadnt been in the Euro and and – and i use the word advisedly – monetary policy wasnt dictated to by ze germans. I wonder if they would have expanded so much or if they would have reigned in their borrowing ? Something to ponder over some cheap sangria?

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  • techie,

    Spain built its way out of the doldrums, starting long before the eurozone was created – what the euro did was to push a sound strategy to excess.

    Had they not joined the eurozone, they might well have over-built, albeit to a lesser degree; and would now be busily devaluing their way out of trouble, and making their real estate more attractive to europe’s retirees.

    ~~~

    I’ve been looking at the Italian numbers to see if there’s any credible way that they can stay in the eurozone without defaulting.

    I think it could be done, but it would need someone like Mussolini to force the nation to take the medicine.

    – They would need a wholesale bonfire of regulation, to liberate their industry.

    – They would need to find constructive work for their unemployed, and oblige them to work for their benefits.

    – They would be need to impose an immediate moratorium on retirement, to maximise the economic activity of the nation.

    – They would need to slash the wages of the highest earning amongst the public sector, including their MPs

    Will they do it? – Of course not…!

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