Editorial:
The Senate agreed last week to change the rules, slightly, regarding compensation for buyers in good faith of those properties which would later be claimed as 'illegal houses'. Now, the judge must consider insisting on full compensation before the demolition order would be signed. This could mean, since the builders have often 'gone bust' (or put their holdings in their wife's name) that those houses will stay: even without, in some cases, water and electricity, so important to elderly residents. But, it's a start, and the AUAN, the SOHA and their supporters are to be congratulated. The British press, in particular, and glossing as ever over the small print, is jubilant. All of this sudden, well, comprehension of the politicians, just before local elections. Yet, far more importantly, at a time when the pound is high and the euro is low, the message from Spain is clear – Come back, we have homes to sell!
Housing:
The ruling in the Senate as seen by the British press: The Telegraph: 'Britons who bought homes in Spain that have been declared illegal will now be compensated before any demolition' (here) and The Daily Mail: 'Joy for Britons duped into buying illegally-built Spanish homes as country brings in laws which prevent their properties being bulldozed without being compensated' (here). However, as a spokesperson for the PP said later: “the owners do not want compensation, home-owners want their houses”.
'Recent studies of the different nationalities who buy a property in Spain have shown that the British continue to lead the ranking with 18.62%; followed by the French with 9.39%; the Germans, 7.25%; Belgians, 6.90%; Italians, 6.13%; Russians, 5.83%; Swedish, 5.83% … and the Norwegians with 3.74%. In most cases, they started out as tourists who had spent their holidays in Spain and had enjoyed the experience, thereafter deciding to take the next step to invest in a second home; the main reasons being the quality of life, plenty of sunshine, good flight connections, health care, gastronomy and culture...'. Found at LPG.
On The Pulse says: 'We are in no doubt now that the property sector in Spain is well into the road of recovery. Official figures and statistics have more than proved that so far. House prices and purchases are gradually increasing month after month. In fact, the National Statistics Institute (INE) published figures which have revealed that in January 2015, a total of 33,416 properties were sold. This is still one of the lowest quantities in the recent history of property sales in Spain, yet it is still higher than the number sold 12 months previously...'.
'Warnings that the recent stabilization of the Spanish property market should not be mistaken for spectacular growth were borne out on Monday by the latest statistics...', says Spanish News Today.
'Owning a home in Spain often means you will be part of what is known as a “Community of Owners” with rights and obligations related to the common areas and facilities enjoyed by owners, for example the shared gardens and pool of an apartment complex. Mark Stüklin's Spanish Property Insight finds six ways to cut down on community costs.
Tourism:
'Madrid: Spanish five-star hotels are serving up white rice for breakfast as Spain offers quicker visas and seeks more direct flights from China to tap into the surging wave of Chinese tourists...'. Found at The Bangkok Post.
Finance:
The Banco Madrid has suspended all activity and entered insolvency proceedings. '...This came about after legal action was taken by US law enforcement authorities on Tuesday against the parent company of Banco Madrid, Banca Privada de Andorra (BPA). "This decision comes in response to the sharp deterioration of Banco Madrid's financial situation as a consequence of the important withdrawals from client funds after the latest events which have affected its capacity to meet its obligations," Banco de España said in a statement, released on Monday morning. Deposits were protected by the Spanish deposit guarantee fund of up to €100,000 per client, the bank said...'. From The Local. The Bank of Spain says it will not rescue the stricken bank, and depositors will be able to recuperate no more than 100,000 euros each. There are/were 80,000 clients at Banco Madrid.
A piece at El Ventano talks of Spain's 'Capitalismo granuja' – 'rogue capitalism', saying that Spain has acted like a fiscal paradise for the low taxes asked for major corporations and the wealthiest individuals in the past years, and now for its capacity to lauder fortunes. The Andorran bank (located in a country known and appreciated as an exclusive and select fiscal paradise) bought the Banco Madrid in 2011 without any official objection. Funds were repatriated and washed. The process was rounded off, says the article, by Montoro's timely fiscal amnesty. If it hadn't been for the Americans...
Andorra is facing a severe threat to its economy with the scandal of one of its leading banks being described as a “financial institution of primary money laundering concern,” by the U.S. Treasury Department (see BoT 103). Income to the principality comes mainly from 20% banking and 80% tourism, according to El Mundo. Meanwhile, clients of the stricken Andorran BPA may take out a maximum of just 2,500€ per week.
'BBVA, Spain’s second biggest bank, has published a new report with upbeat projections for the Spanish housing market in 2015. Citing improved expectations for economic growth, and improving financing conditions, BBVA forecast that 2015 will deliver more home sales “accompanied by a moderate growth in prices, and another rise in development activity”...'. From Mark Stüklin's Spanish Property Insight.
Britain's 'TSB has confirmed it has received a £1.7bn takeover approach from Spanish bank Sabadell. The approach to the UK bank comes less than a year after it rejoined the stock market after Lloyds Banking Group sold off 50% of the business. TSB said its board was willing to recommend Sabadell's 340p-a-share offer. It said that Sabadell could support and accelerate its "retail growth strategy". Found at BBC News.
Spain is the World's seventh largest arms vendor says El País. The industry is a major supplier to Australia, Norway and Saudi Arabia.
An essay on why the AVE is a commercial failure (but a political success)...
Politics:
As Mi Mesa Cojea puts it: No one can say that the Partido Popular doesn't keep their promises. They promised to join the elections without a single 'imputado' – accused – on their candidate list and they have kept their word. Ten months before the General Elections, no less. They've done it in an indirect way, of course, through the reform of the 'Ley de Enjuiciamiento Criminal' – the criminal prosecution law – approved last Friday, which substitutes the vulgar 'imputado' with the much more elegant 'investigado'. (See also El Mundo: 'Now There are No More Accused, Just Subjects under Investigation').
'The emergence of two new parties has blown Spanish politics wide open. The rise of the far-left Podemos party and centrist Ciudadanos means the next general election, at the end of this year, is set to be a four-horse race...'. From BBC News.
Another political party that is quietly bubbling along is the PRUNE, the 'Partido Renacimiento y Unión de España', the first Muslim party in Spain, which will be present in all the autonomous elections this year. Their web-page here.
Corruption:
The Government-run agency that investigates money-laundering (Sepblac) has found 23 'suspicious operations' within the Banco Madrid corresponding to the same number of businesspeople and politicians. More at El Boletín.
Fraud against insurance companies is the subject of an investigation from El Mundo. The highest areas for improper and fraudulent claims against the industry are Ceuta followed by Andalucía, Melilla and Asturias.
The vice-mayor of Valencia Alfonso Grau (PPCV) has resigned from his job following the start of the trial into the Noos Case in Palma de Mallorca, in which he is one of the accused. Story here. Alfonso Grau was an important and useful ally of the Mayoress Rita Barberá, says Euro Mundo Global here.
Andalucía Elections March 22nd:
The Andalucian regional elections are this Sunday. Three main TV debates and much printers' ink has gone into the subject of post-election pacts or coalitions. The PSOE-A led by Susana Díaz appears to remain (perhaps inexplicably) as the largest group. We shall know soon enough who won. Some Spanish news-links of interest here, here, here and here.
Susana Díaz says she will open new Andalucian 'embassies' abroad if she wins the elections. There are currently sixteen of them controlled by the 'Agencia Andaluza de Promoción Exterior' – at a cost of 15.8 million euros a year – and the plan is to increase these to have a presence in forty countries worldwide. (Story here). Mind, Catalonia is opening another fifty (We'll use the word 'embassies' again). As one can see on this map, they already have a lot.
Local Elections May 24th:
'If you are on the padrón but not registered to vote (despite what many town halls are telling you, these are two different things) you have one final chance to get on the electoral roll during the week between the 6th and 13th of April. All town halls are obliged to carry out a final check of the electoral roll (exposición del lista censo electoral) during this week, so you can go to your town hall, ask if you are on the electoral roll, and if you aren’t, get on it ahead of the municipal elections on May 24. If you speak Spanish, you can also call the provincial Oficina del Censo...'. Sound advice from David Jackson.
Various:
Suicides in Spain are depressingly common, apparently, with more of these tragedies than traffic accidents, work accidents and murder added together. A total of 3,539 suicides were recorded in 2012. Harsh numbers, but Spain has the third lowest suicide rate in Europe. More at La Información.
'On Tuesday, March 10, 19 Spanish citizens were rounded up in dawn raids by the Madrid police. They are accused of committing a crime against the Spanish state. That crime? Trying to prevent, through passive, non-violent resistance, the forced eviction of a local resident. If found guilty, the suspects could face crippling fines. Welcome to Rajoy’s Spain, where helping out your neighbour in his or her hour of need is now an administrative crime...'. From Wolf Street. How foreclosure works in Spain.
Just how much could you be fined for providing your own solar energy? Up to 60 million euros! This would be for not paying your share of solidarity toll, the peaje de respaldo, that helps keep our power companies sweet. Indignant story at .ambiente here.
The monthly salary of a Spanish ambassador, according to El Confidencial, can be as high as 21,000€ nett, while consuls can expect a still impressive 12,000€. This includes various extra payments, known as 'complementarios'. Most of this, thanks to special privileges, is tax-free. The Residence is paid for by the State, as are the staff, official car and household expenses. They also get to travel...
'The Gibraltar government is suing a Spanish daily national over a front page story which pictured the Rock as an iceberg of dirty money. The article, which appeared in ABC newspaper, labelled Gibraltar a ‘tax haven’ and alleged it is home to ‘15 organised crime gangs’ connected to drug smuggling, money laundering and the Russian mafia...'. Found at The Olive Press.
Why are white people called ex-pats when everyone else are just immigrants? A question only The Guardian can answer...
Andorra, that small Pyrenean state shared under the administrations of the President of France and the Bishop of la Seo de Urgell, has only ever been invaded once. In 1934, five Guardia Civil crossed, illegally, to arrest a man who would be king of a newly-instituted and independent Andorra: Borís Mijáilovich Skósyrev Mavrusov, or as he preferred: Boris I of Andorra. It's quite a story here at Historias de la Historia. (The picture is gold, too).
Vandals destroy Europe's largest dinosaur egg nest at Coll de Nargó site. More here.
Are they really going to put up a pádel court in the middle of the Mérida Amphitheatre during May? Apparently, according to El Huff Post. It's to do with the city's patronage of the World Pádel Tour 2015.
'Congost de Mont-Rebei or the Gorge of Mont-Rebei is a beautiful gorge created by the river Noguera Ribagorçana as it cuts through the ‘Sierra de Montsec’, a mountain range in the Catalan province of Spain, and forms a natural boundary between Aragón and Catalonia. It lies between the province of Lleida and Aragón, between the regions of La Noguera and Pallars Jussà, crossing the Serra del Montsec...'. From Amusing Planet. In pictures, it looks more hair-raising even than that one in Málaga (see BOT 103).
For your daily update: Business over Tapas is on Facebook here.
Seven Canary Islands... or maybe eight? ABC explains about the mysterious Isla de San Borondón here.
Fifteen great movies filmed in Spain. Story at The Totally Spain Travel Blog.
Deflation Update
by Andrew Brociner
We discussed deflation at some length over three consecutive issues around this time last year and it seems to be a good point to see what the developments are.
In general, the reason why deflation poses a problem is that during periods of declining prices, people tend to put off purchases, waiting for prices to fall even more, thereby reducing consumption and growth. This is quite the reverse of what happens in periods of inflation, in which people spend more quickly before prices increase. In countries which have experienced hyperinflation, the time lapse between changing prices is very short causing people to rush.
In the case of Spain, consumption has declined sharply since the boom and although it has picked up somewhat lately, it is still a long way from where it was, as can be seen in the graph below. It is, in fact, still at a level where it was in the late 1990s. And with unemployment so very high in Spain, it is clear that with little to spend, deflation can only exacerbate this problem.
Added to this, with an ageing population, the pattern of consumption changes, lowering spending further. Comparisons with Japan have been made in which the country has been caught in a deflationary spiral for a very long time, with no real efficacious remedies yet. That some European countries, especially Spain and Italy, have the ingredients for this type of future is a cause for concern.
Mario Draghi is clearly taking deflation seriously. The ECB is pursuing expansionary monetary policies with, more recently, sovereign bond purchases and statements by Draghi reminding people that the ECB`s mandate of price stability around the 2% inflation target goes both ways in that corrective action is necessary in the current situation with prices falling too far below this target.
And yet, Spain does not seem to think it has a deflation problem, or that it is something to worry about. Comments by the Governor of the Bank of Spain and the Minister of Finance, as recently as December 2014, are clearly along these lines.
So, is there deflation in Spain? We can see in the graph below that Spain is certainly experiencing a period of declining prices. We have, in fact, updated the graph from last year and the data over the past year confirms this trend.
The last entry for consumer price inflation for January 2015 is – 1,5% over the same month last year. Should this trend continue, then it would clearly be worrying, since expectations of deflation would work its way into the system, creating a deflationary spiral with the country stuck in this situation, exactly as has happened in Japan. It is precisely this scenario which Draghi wants to avoid. For now, it is too early to say this is, in fact, a problem as we are not there yet. But the elements are there and the data is so far backing it up, so we will have to wait and see how it develops. In the meantime, the ECB is doing what it can to avoid the scenario.
Finally:
An old favourite: 'Formentera Lady' from King Crimson. On YouTube.
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