Brilliantly written article.
It is clear Ireland and Greece have no other choice but to renegotiate their bailout terms. Walking away from it may seem like a good bargaining chip but in the long run impractical. The fact is Irish and Greek debt is every bit as much an EU problem and as national one.
Greece is actively engaged in a form of plea bargaining right now.
It is also clear, particularly in the case of Greece that if default, hair cut, restructuring, call it what you may takes place the banks of France and Germany stand to lose sufficient capital which will put their own survival in doubt.
The governments of both these principal EU states will have no choice either to further extent the bailouts through the ESF and make them more affordable. Or alternatively allow Greece to fall and bailout their own banks.
Looks like a rock and a hard place to me.
Since their principle concern is the overall stability of Europe and the Euro they really have no choice but to blink first.
Incidentally it was at France’s insistence when signing the Treaty of Versailles in 1918 that Germany make massive unaffordable financial reparation. It successfully kept Germany in bankruptcy for a generation.
Ultimately leading and arguably partly causing the next conflict. History has a predictable habit of repeating itself.
I think that this paragraph settles any discussion regarding buying-or-not-buying-in Spain-in-2011.
“But there’s case study after case study of British buyers who have been left ruined after finding that their dream Spanish home was either built illegally, or worse still, built legally, but then deemed illegal years later due to some retrospective law change. It’s hard to see anyone in their right mind buying there until there’s some more certainty over the rule of law.”
The MSN article accurately says it all.
EU sovereign debt will not go away. It’s an elephant in the room and likely, nay certainly to cause in time some restructuring of the EU itself.
I wish it didn’t, but all these articles and opinions remind me of the Eton boating song, both the clean and rugby versions. Swinging together is indeed what we are all doing and my frantic searching for good news about Spain has proved fruitless.
After stopping for a few optimistic weeks, estate agents are again advertising their properties with headline reductions, down and down the prices go, all swinging together.
I was privy to a conversation between a buyer, an estate agent, and a seller on the end of a telephone. The English buyer had already negotiated a 25K reduction on a 150K property, already reduced from 250K a year ago. The buyer was getting more confident by the minute and asked for all the quality furniture to be included in the price.
To my surprise, the seller agreed immediately; even the hard-nosed estate agent looked shocked. We all looked expectantly at the buyer, an elderly, respectable chap from Yorkshire.
He shuffled around a bit, his accent became thicker, and then he suddenly announced that he was making a final offer of 105K for the property, furniture included.
The estate agent blushed and although I had no interest in the proceedings, found myself getting excited. Finally, the estate agent relayed the new offer to the seller.
There was some hesitation on the other end of the telephone and I thought the deal was off, as did the estate agent. The buyer from Yorkshire was reaching for his pipe but the agent pointed to the large No Smoking sign behind him.
Then the agent put the phone down and invited us all to a drink outside the Spanish cafe a few doors away. The house valued at 250K a year ago, a three bedroom villa with a swimming pool, had just been sold for 105K.
There’s a sequel to my story. Both parties seemed to be in a hurry to complete the deal and appeared before the Notary only five days later. The buyer was paying in cash and employed a gestor as a translator; the seller didn’t bother with a lawyer at all, and the estate agent sent a young trainee along to collect his commission.
The buyer immediately went to the house to change the locks in case the seller, a fellow Englishman, took away any of the expensive furniture. The furniture was still intact but he found a large cardboard box full of letters from the local Caja. He took the latest one to his gestor who translated a letter from the Caja threatening to repossess the property as the 175K mortgage was six months in arrears.