I came across this wonderfully made video that would be a total LMFAO if there were no people suffering from the topic it talks about. It offers a simple explanation of why the country got to the its current state. The audio is in Spanish but it has English subtitles.
The Guadian has recently released an article featuring the town of SeseƱa, south of Madrid, the prime example of the Spanish overdeveloping and paradigm of the housing bubble.
Half a quarter million people have been foreclosed and it is estimated that another 200.000 mortgages will go underwater over 2012. The majority of the working population is being hit with ever-increasing taxes, transport and electricity bills.
Consumption is resenting, retail profits falling and margins compressing so much that a tsunami of shops not opening the next day is hitting the Spanish main street. This deflationary effect, as I mentioned previously, comes from both fear (of losing the job) and real monetary contraction (M1 monetary base is fleeing the country and being used to pay the credit granted some 10 years ago, putting inflationary pressure on Germany and other net-creditor nations).
The sole collateral the Spanish banking system has is real estate. Flats meant for a middle class that is now non-existent, underemployed or unemployed, with no possible rebound in the near future and even the possibility of losing an entire generation if the 50 percent young unemployment settles, which is very likely due to the continued loss of industrial activity over the last 30 years and a burdensome bureaucracy that prevents entrepreneurship.
There is a lot of talk on Zerohedge about Spain. I believe the situation in Spain will worsen, and that those employed will face the costs of a failing banking system with a real-estate problem. In the financial world, the time for Spanish banks to hide their balance sheets is over. One day, no ECB cheap credit will be able to sustain both those failed banks and southern sovereign bonds without getting the EU into a hyperinflationary spiral. There is definitely something very fishy when Spain's PM avoids the press like this:
2 comments:
I can't stand it..its L O S I N G!!
"with no possible rebound in the near future and even the possibility of loosing an entire generation"
Thanks TBS!!!!
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