Our readers will remember that during that period, we warned strongly against buying if one did not have surplus cash, part of which they could afford to loose, and warned especially against taking mortgages on floating interest rates. We said, ‘The interest will be rising!’
Less dwellings started
- 4,352 projects were approved in August, and 54,522 during the first eight months. It is anticipated that a total 81,000 units will be approved this year in contrast to the 865,561 in 2006.
Also applications to reforms and repair existing homes are falling. 20,003 such projects have been approved, 11.3% less than last year.
The statistics office of Spain report home sales fell 28.2% in September, compared with the same month last year.
Property transactions 80% down from 2007
Manuel Lopez Pardinas, President of the notaries association in Spain, thus ideally situated to monitor the movements in the property market, in a recent interview said the number of property transactions has diminished 80% since the peak of the boom in 2007, and it will retract 30% this year compared with the bad last year, and that 2012 will not be no better than the last quarter of this year.
Electro domestics 40% down
The electro domestic appliances industry has suffered a 40% reduction in sale since the beginning of the crisis, now down to 1996 levels. The sector is expecting the fall to continue. In the first 10 months of this year, sales contracted 15.4%.
Spain is the third largest producer of domestic electrical appliances in Europe, with 10,000 direct employees and 40,000 aucillaries.
Señor Olivas flees Banco de Valencia
We reported last week that Banco de Valencia was failing and that the ex-president of the Generalitat, Jose Luis Olivas was the President; but he is no longer, having left the sinking ship. As a result, Olivas has now also been forced to leave Bankia, the result of the merger of Bancaja (which controlled Banco de Valencia) and Caja de Madrid.
The Rating Agency Fitch has downgraded Banco de Valencia two levels.
EU: Spain will not comply with fiscal aims
The European Commission has said Spain will not comply with its fiscal aims for this year, nor for the following two years. The aim for this year was achieve a deficit of below 6%, however, it will probably be 6.6%. In 2012 Spain is expected to have a deficit of 5.9% and in 2013 5.3% (2.3% above that projected).
The Commission warns public debts will increase from 69.6% (of Gross Domestic Product) to 78%.
Taxes on work increase
The organisation of tax inspectors in Spain reports:_
In a country with 5 million unemployed, the share of total income tax paid by those in employment rose from 72% in 2007, to 85% in 2010. The share of total taxes paid on capital, that is companies and shareholders, diminished from 28% in 2007 to only 15% in 2010.
15 million for architect project
When Francisco Camps was the President of the Valencia region (he later resigned and now awaits trial for his part in the Gürtel corruption scandal) and PP were governing Valencia town, they paid architect Santiago Calatrava over 15 million euros for architectural plans of three proposed skyscrapers to be constructed near the Ciudad de las Artes y las Ciencias. The provincial court has found that the project is now unlikely to be built.
The payment was confirmed by regional government spokeswoman Lola Johnson, who justified the payments for the project as a "property asset" that can be used or sold.
Unemployed emigrants
Spain attracted and gave work to millions of emigrants during the boom years, who come illegally from Africa, South America, and also from other EU states.
The emigrants did not cause job shortage for Spanish workers, as they took the jobs the Spaniards did not want, primarily in construction, agriculture and domestic services. Between 2004 and 2009, they added 1.7% to the Gross Domestic Product.
An EU study shows that of the 2.9 million Romanians and Bulgarians living outside their countries, 70% are in Spain. On 31st December next year, all impediments to the free movement of labour within EU will be ended.
16,500 medics on strike in Catalonia
In a protest against the cuts of 900 million euros in the budget for public health service, 16,500 medics in Catalonia have been called out on a two day strike. 65 hospitals and 427 First Aid Centres in the region will be affected, but emergency services are assured.
As central government continue putting pressure on the regions to reduce their enormous deficits, we shall see more such actions.
‘Female breasts sagging again’
In 2007 Spain was the leading place in Europe for aesthetic surgery, mainly to lift sagging breasts and reduce abdomens. 400,000 interventions were performed, at an average cost of 2,000 euros. The government included the operations in the inflation index as an ‘item of consumption.’
The crisis has now greatly reduced the number of operations and Spanish women are now having to use ‘Wonder Bras’ to harness the problem.
Crisis of the week:
Prime Minister Papandreu of Greece has resigned, having failed to obtain approval for the harsh savings demanded by EU, ECB and IMF. This was the result of strong resistance from the population, bickering among the political parties and an erosion of support in his own party.
New Prime Minister is Lucas Papademos, a non-party former Vice-President of the ECB (European Central Bank). He is at the moment still negotiating to form a cabinet supported by the main political parties, and has the formidable task to get the savings program approved before the middle of February when national elections will be called. Meanwhile, the squabbling and manoeuvring between the parties and politicians is continuing.
Due to distrust by the markets, and a series of scandals, Prime Minister Berlusconi of Italy has also fallen, and has been replaced by Mario Monti, formerly a commissioner in the EU, as the new Prime Minister of the Euro Zone’s number 3 economy. He also is still negotiating to find suitable ministers and trying to win support from all parties.
- A five year bond issue offered by the Italian government had to be reduced in volume and still the interest rate was 6.29, with a country risk of 480 points (the situation on Tuesday morning).
At the same time the interest rate on Spanish 10 years bonds surpassed 6% and the country risk hit 455 points (Wednesday morning). Spain was supposed to offer 7,500 million euros worth of bonds this week, but the Administration decided to reduce the offer to 3,500 million. However, buyers were found for only 3,158 million, in spite of a record interest rate of more than 5%, 40% higher than in a similar offer in October!
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