The students were supported by the movement of the ‘indignated’.
‘Indignateds’ call for global protest on 13th November
The movement of the ‘indignateds’ has called for a global protest on 13th November, one week before the Spanish general elections. Their declaration in Spanish can be found at [email protected]" target="_blank" >[email protected]
‘ More fundamental changes, less public relations ! ’
In a seminar organised by the University of Salamanca, Gilles Tremlett, the Guardian correspondent in Spain and Raphael Minder from the New York Times, highlighted the economic fundamentals and lack of transparency by the Government as the main reasons for the lack of confidence in Spain. Luis Garicano, professor at London School of Economics, said, ‘Let us not deceive ourselves, the world has no confidence in Spain.’ Minder added, ‘Spain needs to improve its fundamentals, not its public relations,’ referring to the various ‘road shows’ being orchestrated by Government Ministers.
Fighting the crisis: More holidays
The Government has published the list of next year's national holidays; one more than this year! These are in addition the holidays of the regions and your local municipality, and not forgetting the ‘puentes’ the bridge days between a holiday and a normal weekend…
The national holidays are:-
6th January: Epiphany
6th April: Holy Friday
1st May: Labour Day
15 st August: Assumption of the Virgin
12th October: National Day
1st November: All Saints
6th December: Constitution Day
8th December: Immaculate Conception
25th December: Birthday of Our Lord.
Reduction of deficit considered impossible
By now almost all economist, commentators and politicians agree that, because of the bad economical situation and the free spending of regional administrations, reducing the public deficit to 6% this year (declared aim of the Government) will be impossible. Edward Hugh, well-informed economist living in Barcelona, expects the deficit will be 1.5% higher than planned.
Property prices up 155% from 1995 to 2007
The European Commission's last quarterly report revealed that the cost of dwellings rose 155% between 1995 and 2007, and fell just 20% from 2007 until the beginning of this year. Only Ireland and Malta experienced larger increases, with 172% and 157% respectively. The Commission's Director General for the Economy, believes that variable interest mortgages, credit valuations above market values and tax incentives for the purchase of dwellings, increased the market imbalance.
‘Ladrones’ found on Google
‘Ladron’ is the Spanish word for thief. The leftist party Izcuerda Unida (IU) searched on Google for ‘ladrones’ then 'PSOE' (Socialist Government Party) 'PP' (the main opposition party destined to win the forthcoming elections) and finally for 'IU''. Google came up with 7,380 hits on PSOE, 14,700 on PP and none on IU.
What if we leave?
The promised decree by the Regional Junta de Andalusia to legalise the thousands of so called illegal dwellings in the Axarquia area in northern Costa del Sol has not materialised. President of the association ‘Save our Homes, Englishman Philip Smalley, has asked:_ What happens if we leave?
The economy in the Axarquia area, like other areas in Andalusia depends largely on the settlement of foreigners, thus the Spanish population would be severely hit if they left.
Bad notes for public administration
Spaniards confidence in their public administration is low and falling.
On a scale of +10 to -10, Spaniards give their Administrators - 2.8, down 1.5 points on the last European Union survey.
The average points awarded in the 27 member states was -1.4 points. Lowest confidence was registered in Greece with -5.9 points, followed by Romania - 5.8; Latonia – 4.9; Ireland – 3.8 and Portugal – 3.4. The best administrations were Luxemburg +2.4 points and Austria +1.8.
64% of Spaniards do not expect the Administration to improve in the next 12 months.
Mafia money laundered on Tenerife
Thirteen arrests for assisting in money laundering for the Italian mafia groups Nuvoletta and Polverino, have been made in the south of Tenerife. A number of searches were made and several bank accounts frozen. Eleven of those detained are Italian citizens; one is English, the last a Moroccan.
The clans have made several investments in the municipalities of Arona and Adeje and own the tourist complex ‘Marina Palace’.
Spain sentenced for noise in European Court
The European Court of Human Rights has condemned Spain for inactivity by the Administration in protecting citizens from noise. Diego Martinez and his family in Cartagena (Murcia) have, since 2001, had a disco 10 meters from their house. Mr. Martinez presented medical certificates on the effects of the noise, especially during the night. The town hall also received noise levels readings, but ignored them. The Supreme Court of Murcia also refused Mr. Martinez's legal action.
1,983 properties to be auctioned in Mijas
Mijas municipality in the Province of Malaga have 1,982 properties waiting to be sold by auction due to non-payment of local taxes and charges, and another 300 are in the pipeline. The properties are not only dwellings, but also commercial premises, storerooms and garages. There are also thousands of cars embargoed for non-payment of taxes.
Old peoples homes without funds
The Administration in 8 regions are not able to pay their part of the costs for the so called ‘centros concertados’. These are private centres, some providing medical attention, where the regional governments have committed themselves to financing part of the running costs.
The non-paying regions are Valencia, Andalusia, La Mancha, Murcia, The Balearics, La Rioja, Madrid and Catalonia.
The crisis this week:
Jose Manuel Barroso, President of the European Commission, in a meeting with nine Spanish Regional Presidents, said, 'Spain is on the edge of the precipice’
The ‘Troika’ from IMF, European Commission and the European Central Bank has, after Greece admitted it would not reach the economic goals for this years, recommended that the country should nevertheless be given the next instalment of 8,000 million euros of the ‘rescue package’
The European Commission has launched 29 initiatives connected with better supervision and regulation of the financial sector, amongst them penal sanctions for Directors of entities abusing the market; prohibition of bonus and dividends in banks which do not comply with the requirement of recapitalisation, and a proposal for a tax on financial transactions. This coming weekend the Euro Group is meeting to discuss Europe's difficult financial situation.
Rating agency Moody’s has followed up last week's Standard & Poor’s downgrading of Spain, by downgrading the public debts from AA2 to A1. They have warned they will reduce the Spanish classification further if the Government elected on 20th November does not takes decisive steps towards fiscal consolidation.
Rating agency Moody’s has reduced the qualification of CAM from ‘D’ to ‘E’, denoting ‘rubbish.’
The proposed cut in Greece's debts to private banks by up to 50% has placed many banks in the danger zone. The eight largest money-market funds in the US reduced their lending to French banks last month. Last week the European Central Bank gave banks unlimited access to cash until January 2013.
On Tuesday, the ‘country risk’ of Spain (meaning the difference in interest compared with Germany on Government bonds) was 333 points, with an interest rate of 5.34%. IBEX stood at 8.800 points on Wednesday.
Spain managed to place 4,602 million euros in public bonds at a slightly increased interest rate, but, the question is, how much of the debt has been purchased by the European Central Bank, Bank of Spain, and similar institutions.
For the first time since 1995, unpaid loans to Spanish banks rose above 7% in August. The total volume of bad loans now stands at 127,737 million euros, up from 127,717 last month,
Swiss bank UBS estimates that the Spanish banking sector needs 100,000 million euros additional capital to cover up to 50% of the bad loans.
How crisis could affect us
By Per Svensson
A reader wrote me to say ‘Dear Mr. Svensson, it is interesting to read your reports on the Spanish and international crisis. I admit you have from 2004, when I become a regular reader of your column, consistently been proven right in your warnings and predictions. I also share your indignation over the unabashed greed of promoters and other actors in the property sector, and the inability of the politicians to cope with the crisis, affecting mostly the young, the workers and the middle classes. But what could be the impact of the crisis in Spain to me, a non-resident owner of a holiday apartment on Costa Blanca?’
This question, certainly shared by many other non-residents, requires an answer. I must start with some assumptions:
A. I assume you bought your apartment in 2004, before the promoters raised their prices to the skies. It means you are still ahead of the fall in property values. However, as the fall continues, the market value of your property will drop below the purchase price, thus, if you wanted to sell, it would be at a loss. On the other hand, you may have used the property for many happy vacations; it becoming your second home.
B. Also, I assume you are married and have children which you will leave the apartment to. You will be comforted by our information that, even though the present government would like to increase inheritance taxes, such an increase has not been supported by the regional governments, thus maintaining the important inheritance tax allowances. However, as the lack of funds in the regions becomes more and more acute, we may expect the allowances to be slashed. Also, do not rely on present market values to be the basis for taxation; the municipalities are slow in adjusting the cadastral values downwards.
C. In 2004, when I presume you bought the apartment, the building may have been new and not in need any substantial repairs. For that reason, the Community of Owners fees were low. The building is now 7 years old and wear and tear have their impact. The Community fees are increasing and you will be paying more for your vacations.
D. Do not rely on the European Health Card to cover health services and medicines you need. As the regional governments try to make income and expenses meet, paying their overdue bills to the medical companies, you will see less doctors and longer queues in the local health centres. More and more often you will be recommended to use private doctors from your own country practising in your area, and to bring your medicines from your home country. The PP-government to come in after the general elections on 20th November may introduce what is called the ‘copago sanitario’, which means you will pay part of the health costs.
E. As the municipality runs out of funds, they will invent all kind of charges and taxes on property and cars, and hike existing ones.
F. Oil companies will increase the prices of fuel, irrespective of what they are paying the oil producers. Electricity companies will continue to hike their bills, with the blessing of the government.
G. Banks will continue to overcharge you on everything, making Spain one of the most expensive countries in Europe in which to maintain a modest account. And risky, too !
H. Inflation is 3% and will not go down as long as the country is paying over 5% on the enormous sums borrowed on the international money market. You encounter the inflation in shops, where the food products have often risen 5 times between the farmer and you. And you meet it in the restaurants, where the bill constantly increases. The owner will point to higher food prices and increasing local taxes and charges.
I. If you rely on a Spanish public pension (earned in your working life) be prepared for cuts. In some years, the contributors to the social security system will not be able to foot the increasing bill as the number of unemployed moves toward 5 million.
At his point you may say: Mr. Svensson, you are exaggerating, can’t you see some positive side? Oh yes, I can: The sun will still be shining!
You may want to save this article, and tell me in one or two years time, which of my points did not materialise.
Most Spanish banks would fail proposed EU solvency rules
Spanish newspaper, EL PAÍS, commented:
The European Banking Authority (EBA), the European Union’s supervisor for the sector, is considering raising the minimum solvency level lenders require under scenarios of recession, a new demand that would cause most of the banks in Spain to fail the stress tests drawn up under such a premise.
Citing banking and regulatory sources, Reuters reported Tuesday that the EBA wants banks to have minimum Tier 1 core capital of seven percent under a recessionary scenario, up from the five percent that was used in stress tests conducted on 90 European banks in July, which were considered to have been insufficiently rigorous.
On that basis, 17 of the 24 banks subjected to the probe would require more capital. The recapitalization exercise for European banks would amount to around 100 billion euros, Reuters reported. “A significant number of banks are expected to fail the stress tests,” Reuters quoted one source as saying. In the case of Spain, the number of failing banks will be reduced to 16 due to the merger of Banco Popular and Banco Pastor, one of the banks that failed in July.
Banks that would pass the test under the stiffer criteria include Santander, BBVA, Popular, Sabadell and Banca March. Bankia would fail the test.
If generic reserves particular to Spain and other forms of capital are accepted, eight Spanish lenders would need more capital.’
Spanish banking assosiation protests:
A spokesman for the Spanish Banking Assosiation has critisized the proposal of the president of the European Commissiion, Jose Manuel Barroso, to use dividends to increase the capital of the banks, stating that such comments create ‘uncertaintee and confusion, and place the the entity in a ‘grave situation of suspicion and confusion’.
Has FROB spent its powder?
The Fund for the Orderly Restruction of the Banks has this year so far spent 17.617 million euros of the 18.585 million capital it has received from the government and what it has borrowed itself on the capital markets.
But still remains to support entities like Liberbank, BMN and CAM.
Rating agency Fitch has cut the classification of the debts of FROB from AA+ to AA-, similar to the downgrading for the debts of the Spanish state.
10 Spanish banks downgraded
Rating agencies Standard & Poor’s and Fitch have reduced the debt classification of 10 Spanish banks, including Bando Santander and BBVA. The rating for the two big banks from S&P has gone from AA to AA-. Fitch has reduced the classification of Santander and Banesto from AA to AA- and the one of BBVA from AA- to A+.
Where with your money?
We would recommend our readers with substantial amounts in Spanish banks to reduce their saldo to what is needed for payment of running costs of your property and your stay inn Spain. A safer alternative could be an Euro account in a Swiss or Norwegian bank. Consult your investment advisor.
Botin protest against EU plans
President Botin of Banco Santander has protested against the plans of the European Commission to recapitalize the banks. In a speech Botín said that over the last few days proposals had been put forward to recapitalise European banks. But he insisted it was necessary to stop bailing out the European banking sector until the root of the problem was resolved – the eurozone’s debt crisis.
‘It is possible that some institutions that are particularly affected by the Greek public-debt crisis, or by the market-debt crisis in general, may require more capital.’
‘However, there should not be obligatory, indiscriminate recapitalisation of European banks sector without resolving the problem of public debt once and for all.’
These proposals, Botín says, make no sense as they undermine decisions made under Basel III as well as rendering invalid the banking stress tests carried out just three months ago.
They will also add to current market uncertainty and produce a contraction of credit since many institutions will opt to reduce their balances.
‘We need to attack the root of the problem - the sustainability of the euro and of the eurozone.’
‘Now is the time to turn to action and adopt decisive measures to strengthen the institutional design of the euro, as well as to ensure a greater degree of coordination between economic policies in the eurozone.’
Criticism for property service run by Spanish government
When the Spanish government unveiled a new property register in English designed to simplify the buying process and clarify whether properties were legal and safe to buy, it was supposed to encourage British buyers to dip a toe back into the
Spanish property market.
Despite the hype, Spain’s online Land Registry service has been criticised as unreliable and out-of-date
By Sean O’Hare – THE TELEGRAPH
That was until users began to complain that the service provides what they say is misleading documentation in indecipheral English.
In exchange for €23 euros, prospective British buyers can search for a property online, carry out their own due diligence and, should they wish to buy one, receive a Land Registry Certificate that proves they bought their property in good faith. In theory completing this process guarantes them judicial support.
However, a check on a 5,000 square-metre property bought by Colin and Sandra Byrne in 2006 correctly states the size and description of the property in Albanilla, even down to the sloping ceilings and the fact that “the main front faces the mid day” [sic].
What it fails to mention is that the €275,000 property with a €25,000 landscaped garden is subject to a land grab by a developer, who plans to use half of the Byrnes’ land as part of an urbanisation project that will include 47 car parking spaces, two houses and a public space.
Colin Byrne said: “The first thing that struck me was it looked as if someone had taken the information in Spanish from the records and ‘googled’ it into English.
”They described my plot, which is full of olive and almond trees, as ‘a piece of dry land for cultivation of cereals with an area of 48 areas 80 centiares’.
“But more importantly for a prospective buyer, I would think, is the fact that my property is subject to a ‘land grab’, which went unmentioned on the document that cost me €23.
“A builder is planning an urbanisation and I and three of my neighbours stand to lose over 50 per cent of our gardens. The plans have been in Abanilla Town Hall since June 2007 and we had the official notification in 2010.”
It is not just the translated documents that are giving cause for concern. The service seems to be equally flawed in Spanish.
A check on a house bought by Len and Helen Prior in 2003 reveals its location in Almeria and the fact it had a “rectangular pool with semicircular stair access”, but doesn’t disclose the fact it was deemed to be illegal. It was demolished in January 2008.
A search for details on a further two properties deemed illegal three years ago in Albox and subjected to demolition orders that were later suspended pending a retrial, returns no information relating to the properties’ legal history.
The property service in English was rolled out shortly after Spain’s housing secretary Beatriz Corredor came to London with the Spanish Property Roadshow in April this year.
Prior to her arival, she was reported in a Sunday Telegraph interview as saying: “Come here calmly, and trust in the system that we have and the transparency we provide.
“If there is not any mention of legal proceedings on the document, the person who buys the property through the correct channels will then know there is judicial support.”
The online service was part of a package of reforms steered through the Spanish parliament in a bid to improve Spain’s tarnished real estate reputation and boost its withered economy by encouraging investment.
A spokesman for the Spanish government said: “Last July, the Spanish government approved a new regulation that, amongst other measures, obliges town councils to inform the Association of Spanish Property and Commercial Registrars about any urban development regarding properties. As every regulation in democracy, it doesn’t have retroactively [sic].”
There are estimated to be 700,000 unsold holiday homes in Spain, the majority of which are located along the southern coastlines, where property prices have dropped by as much as 60 per cent in certain regions.
The second leg of the Spanish property roadshow is currently in London, providing a platform for developers to sell their properties to UK buyers.
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