Lo dice la prensa extranjera, esto se acaba

No es lo que lo diga yo es que lo publican en la prensa extranjera de Europa Y USA

www.telegraph.co.uk

Spain risks crisis over vanishing reserves




Divorce inevitable as eurozone splits into two camps
Euro helps topple Spanish property
The pain in Spain is mainly on the wane
Spain´s foreign reserves have plummeted to wafer-thin levels, leaving the country exposed to a possible banking crisis if the property market swings from boom to bust - despite membership of the eurozone.

advertisementThe Banco de Espana´s holdings of foreign currencies and gold have fallen to €13.2bn (£9.02bn), equivalent to 12 days of imports.

Over the past two months the Banco de España has sold off 80 tonnes of gold, flooding the world market with enough bullion to dampen the usual spring rally. The bank has reduced its holdings of US Treasuries, British gilts, and other investments at a similar rate.

Total reserves have now fallen by two thirds from €41.5bn in early 2002. Greece and Portugal have seen a similar drop.

By contrast, the overall reserves of the eurozone system have remained stable. France (€76bn), Germany (€86bn), Italy (€59.5bn) have all kept holdings at full strength since the launch of the euro.

The Banco de España refused to comment on the sales, leaving it unclear why reserves have fallen so low, or where the money has gone.

It appears the bank has been draining the reserves to help finance the current account deficit, which has ballooned to 9.5pc of GDP, reaching €8.6bn in January alone.

"The current account is completely out of control," said Alberto Mattelan, an economist at Inverseguros in Madrid.

"We have the worst deficit in our history and worse than any other country in the western world. It has not yet become a ´street concern´, but I can assure you that it is of great concern to us economists. This will turn bad over the next 18 months," he said.

It is often assumed that reserves no longer matter once a country has joined the euro, but this ignores a crucial element in the workings of the EMU system. It is responsibility of the 13 national central banks to act as lender of last resort in a crisis, even though they have no control over interest rates.

"Where this gets serious is if there is a property collapse in Spain and the banks get into trouble," said Prof Tim Congdon, an expert on monetary policy.

The first signs of a housing slump are emerging as the ECB raises interest rates, already up seven times to 3.75pc since December 2005. The shares of Valencia builder Astroc have fallen 77pc since February, setting off a sharp slide across the sector, with knock-on effects on banks with mortgage exposure.

Morgan Stanley said construction accounts for 17.7pc of GDP, even higher than the 15pc peak reached in Germany after reunification - a boom-bust saga that left German banks prostrate for years.

Spain´s private sector has amassed $600bn (£300bn) in foreign debts. Corporate borrowing is 100pc of GDP. The overall stock of mortgages has increased sixfold in a decade. Household debt has reached 120pc of disposable income, largely on floating rates.

Prof Congdon said Japan was able to uphold its banking system in the post-bubble slump of the 1990s because the government could guarantee deposits. "You can´t do that in the eurozone because there is no government to turn to," he said.

Each country is on its own. The ECB may interevene only if the crisis spreads across the eurozone, and it is forbidden from bailing out the member states. The International Monetary Fund warns that the structure leaves EMU exposed to "systemic financial risk".

Reserves are a key defence for each state, hence the EMU quirk that national banks retain the lion´s share of reserves. The ECB has a token 13pc.

For now Spain is still looking rosy: growth was 4pc in the first quarter ; the budget surplus is 1.8pc of GDP ; and export share is holding up reasonably well.

However, the party is ending after a near tripling of house prices since 1995. In a report, The End is Nigh, Jamie Dannhauser from Lombard Street Research, said Madrid is now making matters worse with a new law to hit property speculators.

"This screams of closing the stable door after the horse has bolted. House price growth has clearly peaked and is decelerating quickly. Speculators appear to have got out already, sensing the dangers that lie ahead," he said.

The government cannot devalue its way out of trouble, so it will have to deflate. "Pain seems to be on Spain´s doorstep," he said.

yo paso...( a ver si me sirve un dia que no esté perezoso para repasar el inglés...)

Has Spain´s property bubble just burst?



First America, now Spain.

It looks like the Spanish may be the first group of Europeans to experience a painful ending to the global property boom.

Yesterday, the Ibex index in Madrid closed down 2.7% as it was swept by “fears of a property crash,” writes Ambrose Evans-Pritchard in The Telegraph this morning.

The wonder is that it has taken investors this long to become nervous…

Spanish property stocks saw their share prices plunge yesterday - builders went into “free-fall” while mortgage-exposed banks were also hit hard. Sacyr, the country’s biggest property group saw its shares fall 8%, while Banco Santander and BBVA, Spain’s biggest banks, both fell nearly 3%.

The fears seem to have spread from the troubles of one fairly obscure Valencia-based builder, Astroc. The group has seen its shares fall by 62% over the past week, after changes to the region’s planning laws. But other than this, as Evans-Pritchard puts it, “there appears to be no obvious trigger for the sudden switch from euphoria to panic.”

To be fair, Astroc was due a correction - its shares have climbed from e7 to e75 since listing last June, writes Fiona Maharg-Bravo of Breakingviews. And some of the property stocks have been “trading at more than a 20% premium to their net assets value.”

And this is at a time when Spanish house price growth is faltering. “House prices are rising at their slowest in almost a decade. In some places, they are falling.”

Maharg-Bravo reckons the correction may well continue - though she seems more sanguine about prospects for the broader Spanish property market. “Long term interest rates are still low, employment and wages are still growing, and house prices are still rising by 7% a year, after all.”

We’re not so sure - and nor is Evans-Pritchard. In fact, the statistics on the Spanish property market should make for, frankly, terrifying reading for anyone who is thinking of, or is already, investing there.

More than 800,000 homes were built last year - that’s more than France, Germany and Italy combined, “leaving a glut of property hanging over the market,” says Evans-Pritchard. House prices have risen 270% in the past ten years. Household debt has climbed from 75% of disposable income in 1995 to 133% now.

That’s all bad enough - but Spain’s market is also unusually vulnerable to rising interest rates and panicky speculators. In a country of 40 million people, “some four million foreigners own property.”

One of the main reasons that property bulls - and sometimes more sober experts - often claim that house prices won’t fall is because if you own a home, and prices are falling, you will tend to hold off selling unless you absolutely have to. So the supply of homes on the market dries up, keeping supply and demand broadly balanced, meaning prices remain roughly stable, until conditions pick up again.

This is debatable on many levels - but let’s go with it for now. The problem for a market like Spain is that holiday home owners and fly-to-letters have neither the desire, nor in many cases, the financial reserves to sit on a property that is falling in value. And that’s not even considering the number of ex-pats who emigrate, only to turn around and come back within the first few years of moving.

On top of that, many second home-owners are largely relying on money released by remortgaging their main residential property. So with interest rates rising, for example, in the UK, sustaining two homes is becoming more difficult for all those property moguls who have overstretched themselves to buy their place in the sun.

In Spain, the situation with interest rates is even more grim. Because it’s part of the eurozone, Spain can’t set its own interest rates. And the reality is that eurozone rates are largely set with Germany in mind. The trouble is, Germany has been at pretty much the opposite end of the business cycle from the rest of the world (except maybe Japan) for about ten years now. Rates were very low when Spain joined the euro, which fuelled the boom in the first place - as Bank of Spain governor Miguel Fernandez Ordonez says: “The single monetary policy has meant that excessively loose conditions for our economy have been almost continuous.”

But now that Germany is recovering (for more on this, see the cover story in the latest issue of MoneyWeek, out on Friday), eurozone rates are rising rapidly - there have been seven hikes since December 2005, and there’s no sign of the European Central Bank stopping. And in Spain, a whopping 96% of mortgages are on floating rates, rather than fixes - so every rise hurts almost every mortgage holder.

Rising interest rates, a hugely overvalued and highly speculative Spanish property market, and massive consumer debt - it doesn’t make for a pretty picture. And we’re not the only ones who think so.

Bernard Connolly of Banque AIG doesn’t pull any punches when he tells The Telegraph: “Spain is going to face the very direst of economic circumstances: a cycle of recession, deflation and widespread private sector default - a depression in fact. This stock market slide is not just a ‘correction’. It has a very, very long way to go.”

Turning to the stock markets…

Very interesting.