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Is Spain now cooking its books?

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Re: Is Spain now cooking its books?

#21

Post by anonymousDan »

gaius wrote: post #18
borism wrote: post #16

Earlier quoted context omitted.

Yeah, what's the pattern? Never heard that Ireland had a large grey economy, yet it seems to me to be the most troubled of the bunch.

Not so much in Dublin perhaps, but rural Ireland is all about favours and bartering, it's not even really a "black market" since cash isn't the currency. I dunno, it's cool, it makes it feel much more like a connected community, but you can't trade mackerel for fenceposts (this is a real deal in which I was involved) in the global economy without going via actual cash...

From what I've read about Greece, Ireland's problems are completely different. Nothing to do with a black market, more to do with an incompetent government that let property prices get out of control.

Re: Is Spain now cooking its books?

#22

Post by forgottenpaswrd »

I'm spaniard. Spain has been cooking its books for a long time. Brussels knew it, like they knew about Greece doing the same thing(their economic pros are not stupid) but they short term benefited from that.

The "Spanish miracle"(like Ireland) was created when billions of euros mainly from German and French savers came to Spain as loans. That made money to flow and prices to go up, anyone could buy a 60.000eur house(with a loan with 0%down) and sell it three months later as 90.000eur. That is 30.000eur of profit putting 0%, way more than working. Real state agencies grew like mushrooms after the rainfall.

I had friends that bought one house and later two with the profit they made with the first one!! thinking "prices are never going to go down, they had never been down, we are going to be rich".

That was good for sellers, good for politicians(they get taxes money proportional to the assets price), good for the banks that lended(they got paid), good to the construction workers and companies, good for the gov(less unemployment), so they tried to keep it. They all wanted to believe it was sustainable. It was not. Houses grew +400% but salaries only 17%.

Now our prime minister, Zapatero, thinks "confidence" is the most important thing for the economy to grow. He doesn't care about lying at all, he thinks he could fool all the people, all the time. Time will tell.

Re: Is Spain now cooking its books?

#25

Post by kqr2 »

forgottenpaswrd wrote: post #22

I'm spaniard. Spain has been cooking its books for a long time. Brussels knew it, like they knew about Greece doing the same thing(their economic pros are not stupid) but they short term benefited from that. The "Spanish miracle"(like Ireland) was created when billions of euros mainly from German and French savers came to Spain as loans. That made money to flow and prices to go up, anyone could buy a 60.000eur house(…

Are housing prices still inflated? Also, are people able to renegotiate their mortgages?

The US also had a major housing bubble. I am interested in how Spain is handling it.

Re: Is Spain now cooking its books?

#26

Post by GreenNight »

kqr2 wrote: post #25
forgottenpaswrd wrote: post #22

I'm spaniard. Spain has been cooking its books for a long time. Brussels knew it, like they knew about Greece doing the same thing(their economic pros are not stupid) but they short term benefited from that. The "Spanish miracle"(like Ireland) was created when billions of euros mainly from German and French savers came to Spain as loans. That made money to flow and prices to go up, anyone could buy a 60.000eur house(…

Are housing prices still inflated? Also, are people able to renegotiate their mortgages? The US also had a major housing bubble. I am interested in how Spain is handling it.

Quite inflated still, it'll be a long time until they go down or a longer time until wages catch up (in the opinion of some, me included).

The problem here is that you cannot return the house to the bank and be debt free. If you give your house back to them they sell it, and whatever is not covered by the sale you still owe to the bank.

And if you still owe 200K€ to the bank but your house valuation has gone under that you have a hard time, because you have to put up with the extra value with some other possessions you have.

So it's not very pretty.

Re: Is Spain now cooking its books?

#28

Post by lilsis »

GreenNight wrote: post #26
kqr2 wrote: post #25

Earlier quoted context omitted.

Are housing prices still inflated? Also, are people able to renegotiate their mortgages? The US also had a major housing bubble. I am interested in how Spain is handling it.

Quite inflated still, it'll be a long time until they go down or a longer time until wages catch up (in the opinion of some, me included). The problem here is that you cannot return the house to the bank and be debt free. If you give your house back to them they sell it, and whatever is not covered by the sale you still owe to the bank. And if you still owe 200K€ to the bank but your house valuation has gone under th…

How does bankruptcy work in Spain? Does such a thing exist?

Re: Is Spain now cooking its books?

#29

Post by blueben »

jseliger wrote: post #24

Megan McArdle is skeptical: http://www.theatlantic.com/business/archive/2010/09/spain-co... , at least skeptical that Spain could've cooked the books to the extent reported.

How did people not learn from Greece? Yes, an entire country can tell an extreme lie and get away with it for a long time. Skepticism is justified, but not because "they couldn't have done it so badly for so long".

Re: Is Spain now cooking its books?

#30

Post by paulobsf »

pchristensen wrote: post #17
bobds wrote: post #10

Earlier quoted context omitted.

What's the pattern?

PIIGS - the countries whose economies boomed and now are crashing so hard they're threatening to bring down the EU.

As a Portuguese citizen I consider that acronym as offensive. http://en.wikipedia.org/wiki/PIGS_(economics)#Controversy

I think that we all agree that generalizations are the sign of narrow-minded individuals...

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