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Weekly Report (01.10.11)

By Per Svensson

miércoles 22 de octubre de 2014, 11:21h

Ibex up 3.84% in one day

On Tuesday the Ibex stock index followed exchanges worldwide jumping 3.84% to 8,515 points. However, we remind our readers that it stood at almost 11,000 points in May, so it seems the downward trend is dominating and only being 'interrupted' briefly.

 

Catalonia: No money for care centres

The government of the debt-ridden Catalonia region has warned old people's care centres and the handicapped that in September and October, due to lack of funds, they will not be transfer the funding due.

Protests in 40 cities

  1. The demonstrations are organised by Plataforma de Afectados por la Hipoteca (PAH) and have the support of the movement 15 M (the indignated).

In the Valencia Region alone, there are 72 evictions a day for non-payment of mortgages.

 

Prosecutor investigates notaries and registrars

The State Public Prosecutor's office is investigating notaries and property registrars who are accused of making illegal charges on the cancellation of mortgages. The investigation is the result of complaints made by the consumer organisation OCU, which last week claimed that in 2010, members of the two collectives illegally charged 93 million euros on 372,042 mortgage cancellations.

The Prosecutor will now investigate all charges for mortgage cancellations since 2007.

 

State budget prolonged

Due to the proximity of the national elections called for 22nd November, the Government has decided not to present a state budget for 2012, and instead has extended the present budget.

This means Ministries, the Regions, and town halls do not know the exact amount they will receive and thus, what they can spend.  Public employees and pensioners will not have their incomes inflation adjusted, nor will taxes be adjusted for increases in prices.

Average pension 918 euros

The social security system paid out 7,132 million euros in pensions to its contributors in September;  4.8% more than in the same month last year.  4,837 million were for old age pensions; 1,359 million widow pensions; 819 million for permanent incapacity; 99 millions to orphans and 18 million to their caring relatives.

The average old age pension amounted to 918 euros.

23% give money to family

  1. Thirty three percent of those buying a home over the past years have been assistance by their family, and have not had to pay interest on the money borrowed.

56% of Spaniards consider it a natural obligation the family should give financial support and care to family members in need. Only 32% of Germans hold a similar opinion, and 30% of the French.

67% of young Spanish between 18 and 29 years are living with their parents, more than double the percentage in Scandinavian countries.

 

Spain out of ‘Champions League’

In 2007 the 'unfortunate' Prime Minister Zapatero boasted Spain was the leader in the ‘Champions League of Nations’ with ‘most matches won, most goals scored and fewer conceded.’  Spain was economically number 8 on the planet. Today it has fallen to the 12th place, and expects to fall another position in 2013.

 

House prices continue to fall

According to the National Institute of Statistics, the average price of dwellings fell 6.8% in the second quarter of the year compared with last;  the thirteenth consecutive quarterly fall.  Resale dwellings fell 8.3%, new dwellings 5.2.

 

Tourism up 9.4% in August

7.54 million foreign tourists visited Spain in August, up 9.4% on last year and the best August ever. From the start of the year until the beginning of September, Spain had 40 million foreign visitors, an increase of 7.8% on last year.

However, Spanish tourism in Spain is falling.  Whilst the total overnight stays in Spanish hotels increased 13.7% to September, the Spanish element fell 1.6%.

 

Gold rush is over

The speculative price of gold seems to have ended.  The fear of recession caused gold futures to fall more than 100 $ per ounce on the Mercantile Exchange of New York. The gold bubble reached a peak of almost 1,900 $ before returning to 1,651 $.

We hope readers who joined the gold rush sold after our warning six months ago that we believed gold had reached its zenith and would begin to slip.

 

8,000 mini-earthquakes on El Hierro

It seems that magma is still moving beneath El Hierro and may continue for some while.

 

Ex-mayor of Ronda arrested for urban panning corruption

Antonio Marin Lara, Mayor of Ronda (Malaga) in the last legislature, has been arrested together with the previous Vice-Mayor and the Delegate for Works and Security,  suspected of planning corruption.  Police searched the town hall but found empty files.

Marin Lara was elected mayor on the list of PSOE, which lost in the last elections. The new leaders in the municipality are not under suspicion.

 

Municipalities ask for more time to repay debts

The Federation of Municipalities and Provinces has asked the Government for another10 years to repay town halls debts, amounting to 5.891 million euros, to the Central Administration. The debts stems from high advanced payments in the years 2008 and 2009, in respect of the part of State income tax, paid to local government, when the tax income for those two years amounted to less than was estimated.

 

The crisis:

This week may become a decisive one with the Greek Treasury rapidly running out of money to pay their bills, the Triumvirate that left the country a couple of weeks ago in disgust returning to Athens to see if they can give a green light for another transfer of funds, and on Thursday it will be clear how great the conflict in the German government coalition is against the ‘support policy.'

-European politicians pretend to fight for the survival of the Euro and the European Union, whilst in reality it is a question of the survival of the banks, heavily encumbered with Greek bonds.  All  experts agree that if Greece goes down, so does Spain.

- The economical upswing in northern Europe is weakening and the fear of a second recession is growing, with red lights showing even for the German export industry. This may have a negative effect on the economy in Spain

-The Spanish treasury managed to place a short-term bond issue in  the markets, but at a 25% higher interest rate than the previous one

-The country risk of Spain has eased down to 320 points

-Bank's property sector debts increased in the third quarter  by 7,250 million euros, to a total of 54,900 million, the highest ever

-CAM bank, now controlled by the Bank of Spain, has sunk 17,500 million in the property sector.  40% of these debts are not  being repaid. The previous director, Maria Dolores Amoros, now  sacked, is demanding a life long pension of 30.791 euros per month.

-Alessio Rastani, a London Exchange stock broker has let the cat out of the bag by declaring that the ‘financial operators are  content in the crisis and are profiting from it.’ He added that ‘the  rescue fund will not function and the Euro will disintegrate…’

Debts in Communities up 46%

By Per Svensson

Based on reports from 150 property administrators in Madrid, information has been published on the financial situation of 3,000 Communities of Owners in Madrid and a Program against being in debt has been presented, which could be of interest to leaders of Communities outside the region.

The information reports that debt to the Communities has risen 46% over the past two years to 375 million euros. Three types of debtors are mentioned: the selective ones, arranging their bills according to priority and often placing the bills from the Community at the bottom of the pile. This group represents 40% of the total. The second group are the professional debtors (representing 22%) who habitually and systematic give various reasons, without a legal basis, for not paying, thus delaying payments for long periods.

The third group consists of those who are really insolvent and are without the means to pay (unemployed, their business closed) totalling 26%.

The rest of non-payers have various reasons for not paying or delaying payments. Important among them are promoters (not paying for unsold dwellings – an illegal practise) and banks that have taken over properties from promoters or individuals who were not paying their mortgages. The banks are hoping that Minister Blanco will help them and avoid taking the title deed of the property. The debts of the promoters and banks represent almost 30% of the total debts.

From many complaints on problems of non-payments in Communities of Owners in urbanisations along the coasts and on the islands, I am convinced that their situation is similar to that in Madrid.  Especially in Communities with many non-resident owners, hoping for years to sell their vacation home in Spain. The situation is often critical. The number of bankrupt promoters and banks almost without funds is also very high in these regions.

 

The program for fighting non-payments

Together with insurance companies and other institutions interested in the maintenance of the property, the Colegio Profesional de Administradores de Fincas de Madrid has taken the laudable initiative to introduce a program to fight the debt situation in the Communities of Owners.  This has proved necessary due to many non-payers ignoring letters from their Community President imploring owners to pay,

or from an individual administrator (professional or not) warning that they may be taken to court.  Often the Communities resist taking the courts route because they fear additional costs and delays.

The Communities included in the program will be assisted by lawyers specialising in Community law, who will send the non-payers stern letters telling them that they will be taken to court if they do not pay within 72 hours and that interest on delayed payments is mounting.

The lawyers will not charge for sending the letters, nor for taking the matter to court, unless, and only when the legal process is won.

The program is only available to Communities in Madrid administrated by a member of the College of Administrators in that region. More information can be found under:

http://www.cafmadrid.es/index.php?option=com_content&task=view&id=1473&Itemid=987

It may be of interest for foreign community leaders to discuss this with their administrator (and if the administrator belongs to a similar college in their area) the possibility of setting up a similar program, or the possibility of collaborating with the college in Madrid.

The problem of debts in Communities is not going away and will increase. The time has come to find joint solutions.

 

The Telegraph reports:

‘The world is already in recession, claimed economist Nouriel Roubini, speaking at the Bloomberg Dealmakers Summit in New York today.

He added that eurozone leaders needed to "get their act" together to ensure that the recession was as short as possible.

The way I see the global economy, I think we’re entering into a recession again in most advanced economies. I think we’re already into one in the US based on the hard and soft data - same with most of the eurozone, same with the United Kingdom.

At this point, the issue is not whether there is going to be a recession or a double-dip but whether it’s going to be relatively mild or whether it’s going to be a severe recession and a global financial crisis.

The answer to that question depends on what’s going to happen in the eurozone and whether they can get their act together. We are running out of policy bullets.

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