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Spain’s capital flight now worse than Asian financial crisis. 🙄
http://www.cnbc.com/id/48891162
Most people have heard the saying ‘Snooze, you Lose’
With Spain’s regional Governments, it’s banks and businesses, plus Central Government all looking for bailout monies, why would anyone risk leaving capital in Spain at present? If things go pearshaped as is looking more likely each day, capital deposits could be decimated or wiped out.
Me personally, I don’t like the developing situation and I would repatriate any monies from Spain to the UK or Germany/US/Switzerland but that’s just my view, or is it? Things are definitely getting worse 🙄
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Well you’ve been trying to spread this message for some time; maybe you’re right?
But funnily enough the Ibex (Spanish stock exchange) is actually up over the last couple of weeks, and the risk premium for interest on bonds is down…
So someone somewhere is not getting the message. Or perhaps someone is being mis-informed?
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M, I’m just saying what has been reported in today’s Press which BTW I don’t write for them, and, my views on what I’d do with any capital deposits in Spain are entirely mine, others may well have different views. Personally, I would not risk leaving monies in Spain as things appear to be worsening. 🙄
I think the last thing Brits who live in Spain would wish to see on top of property price falls would be for their capital to erode, why take the risk by leaving it there, it can always be moved back to Spain if the situation changes for the better 😛
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Totally agree with you dartboy, the financial markets are in a dream world at present and more often or not do not reflect the real state of the economies, they are contrived and manipulated for short term gains, Spain’s Ibex is one for sure, now, imagine if Spain does go pearshaped I’m pretty sure the Ibex will plummet as will many stock markets 🙄
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Moody’s credit rating agency is due to review Spain by the end of the month and could downgrade its debt to junk status, blocking it from markets.
Video: More pain in Spain as unemployment benefit payments rise
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@dartboy wrote:
the ftse 100 is well up on what it was a few months ago does that mean things are improved in the uk economy.
No its all just speculation and bs, traders only people i know who gamble on the word of the figures released when they know full well the figures have been massagedWell yes, the impression is often given of speculators driving the markets up and down, so money can be made on transactions…
Apparently there is a big meeting with Rajoy and Frau Merkel later this week – at that meeting Rajoy will see whether credit will be extended to Spain (ie a state bail-out, although the intention, like the bank bailouts and QE in the UK, is that the money is repaid). The markets will hanging on any messages emitted after that meeting.
Incidentally there is money being invested in Spain (see below) to take advantage of talent at marketable cost , but it’s not coming via the main banks. Some may say (with a little justification) that is a good thing, but money credit is needed for the various communities (and the state) to pay its bills – which is why you’re seeing prescription charges rise and vat increases on school books. If the credit tap is totally turned off, then expect to see far more savage cuts (I was going to say “and Spain leaves the Euro” but I’ve been proven wrong on that to date).The fund will invest approximately €44 million in Spanish start-ups and the rest will be invested in other European countries, mainly Germany and Scandinavia. More than 50% of the funds come from private and institutional investors, while the rest is contributed by public entities. International investors contribute more than 25% of the funds and demonstrate the interest of international investors in Spanish technological companies.
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44 million euros fund for start-ups in Spain is rather dwarfed by the 75 Billion euros moved out of Spain in July alone 🙄 Still seems like Spain is heading for a huge but slow train crash, Banks are propping up major Spanish businesses for fear they will go bust but this shoves the repayments further down the line at more cost too, the Banks are more or less bust, the property market is on the floor, the country is bust too and looks to be heading for Sovereign bailout.
Citizens of Spain will feel the effect of higher taxation from now, unemployment is still rising it seems, huge private funds are being moved out of Spain daily, someone, Rajoy and de Guindos for example need to get a grip and extract their heads from the sand and take their own grubby hands out of the pot. A recent article shows most of this lot are in the ‘old pals act’ club giving jobs for the boys, it’s no example to the battered populus. 🙄
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@angie wrote:
44 million euros fund for start-ups in Spain is rather dwarfed by the 75 Billion euros moved out of Spain in July alone 🙄 Still seems like Spain is heading for a huge but slow train crash, Banks are propping up major Spanish businesses for fear they will go bust but this shoves the repayments further down the line at more cost too, the Banks are more or less bust, the property market is on the floor, the country is bust too and looks to be heading for Sovereign bailout.
Citizens of Spain will feel the effect of higher taxation from now, unemployment is still rising it seems, huge private funds are being moved out of Spain daily, someone, Rajoy and de Guindos for example need to get a grip and extract their heads from the sand and take their own grubby hands out of the pot. A recent article shows most of this lot are in the ‘old pals act’ club giving jobs for the boys, it’s no example to the battered populus. 🙄
If you’re talking about “bank deposit flight” the article here explains why (investment money in industry and/or property is a different matter). As for train crash, do you realise there are some big rail contracts in the offing? Remember the 8 billion contract signed last year to build Saudi’s high speed rail?
I agree though that if credit lines are frozen from the EU, things will deteriorate fast. Which is why the Merkel-Rajoy meeting is of such importance.
http://ibexsalad.blogspot.co.uk/2012/09/july-peripheral-bank-deposits.html
As for the various reports of massive flight – the volatility machine cranking itself up as summer winds down – it’s worth noting that of the 178 billion decrease in non-MFI deposits in Spanish banks, two-thirds is accounted for by a decrease in term deposits and 22 percent by a decline in repurchase agreements that fall under ‘deposits’. Demand deposits have remained virtually flat.
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Not disputing some investment and rail contracts M, the ‘slow train crash waiting to happen’ is a metaphor often used for impending disaster such as Spain’s.
The capital flight from the country is nonetheless of huge magnitude and the reason for the topic to serve as advance warning to move savings etc out of Spain for now which can be returned later when it all blows over.
If the 75 Billion euro capital flight was annualised, the end figure for one year would not be far short of a Trillion Euros and unsustainable for Spain, it’s Banks and Businesses and could trigger a Eurozone wide crash. I don’t think this will happen because the blundering Eurocrats and Government Heads will be forced to act but ‘what if?’ 🙄
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The markets and the Ibex in particular is living and feeding off those now infamous words uttered by Mario Dragi. “We will do whatever it takes to support the Euro”.
He knew what he was doing in saying that when he did. It had the direct effect of reducing Spain’s and Italy’s borrowing costs and sending equity markets north. He also knew he couldn’t deliver it, as the Germans have never stopped telling him since. But hey all politicos do it so why not me as well. Credibility zero. 😈
Market traders are like children. Give them all sweeties and they will leave you alone for a while, believing ‘gods actually in his heaven and all’s right with the world’. At last the sunny uplands are here. Deluded they are.
It’s total bosh of course but they only need an excuse to believe their next bottle of Bollinger is waiting and chilling in the fridge. ‘Look guys here’s a way to pay for it.’ Buy now sell tomorrow or in ten minutes.
The real world for the rest of us is somewhat different. The hash realities of life are now kicking in and we are all at risk. Many of us will have to begin again before this economic trauma starts to abate.
Run for the hills, you betcha, I’m off to rural Extemadura to bury my head under the duvet. 😆 -
As the tourist season comes to an end expect the unemployment figures to rise sharply.
The official unemployment rate in Spain stands at 24% with 4.6 million people out of work but I reckon it could in reality be alot more than this because alot of the unemployed will just have given up looking for work and are not registering as unemployed. Alot of people who are employed work in the massive black economy where they get paid cash in hand and work outside the tax system. The black economy in Spain is huge and is only likely to get bigger as the economic situation there worsens.
The Spanish could do well to learn from the British on how to fiddle and massage their unemployments figures. Officially in Britain unemployment stands at around 8% with 2.65 million out of work but in reality I reckon that the true figure is more like 30% which is 10 million people are unemployed in the UK. This means that one in three of the people eligible to work in the UK is out of work. Given this figure an unemployment rate of 24% that exists in Spain doesn’t really look that bad but in reality the true unemployment figure in Spain is probably more like 50% with 10 million out of work, as many unemployed would not have bothered registering as unemployed in the belief that they can find another job quickly.
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Look guys, this is how I see things, but please tell me if I’m wrong or right about this?
Mr and Mrs Brit owns a property they bought in Spain in the boom at say 300k euros which say has halved to 150k euros now.
They have the rest of their savings say 100k euros in a Spanish Bank and live off pensions and interest which is getting harder to do so.
I would, but would you, move that 100k euros back to blighty for example just in case Spain does a Spexit and reverts to the Peseta which could not only halve the property asset again against Sterling but also halve the 100k euros in the Bank compared to sterling. There may be variations of above fractional reductions but it is the point I’m making.
When things settle down, send the 100k euros (now in Sterling) back to Spain.
Don’t risk a double whammy, for someone who’s unsure about what to do, I think this might be a prudent move and you’ve not lost anything by doing it except a transfer cost.
Please correct my blinkered way of looking at this possible scenario. 😉
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@dartboy wrote:
From reports i have had the tourist season was quiet a friend who lives on the costa del sol said she had never seen it so bad and was glad she worked in gib and was not one of the expats trying to find bar work to help prop up their dwindling savings
and yet the economic figures show a record of foreigners coming to Spain – tourist spend up 6.4% !
http://www.eleconomista.es/espana/noticias/4208810/08/12/El-gasto-de-los-turistas-en-Espana-sube-un-89-en-el-mes-de-julio.html
Of course within the figures you have to take into account national (ie Spanish) numbers are down. Plus, for some reason, Catalunya has had a bumper year, so presumably less so on the CDS?Cataluña es la comunidad que lidera el gasto global con 7.145 millones de euros, lo que supone un 22,9% del total y un crecimiento del 13,7% con respecto a los siete primeros meses de 2011, seguida de Canarias, con 5.899 millones de euros, un 2,9% más.
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@angie wrote:
Look guys, this is how I see things, but please tell me if I’m wrong or right about this?
Mr and Mrs Brit owns a property they bought in Spain in the boom at say 300k euros which say has halved to 150k euros now.
They have the rest of their savings say 100k euros in a Spanish Bank and live off pensions and interest which is getting harder to do so.
I would, but would you, move that 100k euros back to blighty for example just in case Spain does a Spexit and reverts to the Peseta which could not only halve the property asset again against Sterling but also halve the 100k euros in the Bank compared to sterling. There may be variations of above fractional reductions but it is the point I’m making.
When things settle down, send the 100k euros (now in Sterling) back to Spain.
Don’t risk a double whammy, for someone who’s unsure about what to do, I think this might be a prudent move and you’ve not lost anything by doing it except a transfer cost.
Please correct my blinkered way of looking at this possible scenario. 😉
I would have thought most folk would have a good proportion of their investments in UK pensions anyway? And anyone who’s been worried about a Spexit would surely have taken measures already? Not to mention poor returns from bank accounts.
As for which country to keep cash savings in – “experts” always advise you keep a good proportion of cash in the country where you incurr expenses. That way you don’t go through the situation where the pound fell from 1.65 to 1.05 and you lose a good deal of your spending power. Although it can work the other way around..pound is worth 1.26 or so now.
Incidentally, and believe it or not, but there are reports of greater numbers of cash buying of houses (in cheaper areas) despite mortgage backed sales decreasing. Some folk it seems are putting their money into bricks and mortar rather than see the banks lose it all.. -
@angie wrote:
Look guys, this is how I see things, but please tell me if I’m wrong or right about this?
Mr and Mrs Brit owns a property they bought in Spain in the boom at say 300k euros which say has halved to 150k euros now.
They have the rest of their savings say 100k euros in a Spanish Bank and live off pensions and interest which is getting harder to do so.
I would, but would you, move that 100k euros back to blighty for example just in case Spain does a Spexit and reverts to the Peseta which could not only halve the property asset again against Sterling but also halve the 100k euros in the Bank compared to sterling. There may be variations of above fractional reductions but it is the point I’m making.
When things settle down, send the 100k euros (now in Sterling) back to Spain….
When sending the money back to the UK they can keep the money in Euros by having a Euro account with a Bank that allows you to set up a foreign currency bank account and so there is no need to convert the Euros savings to Sterling. In any case the true inflation rate in the UK is around 10% as opposed to the much fiddled and manipulated CPI figure of 3% and so if someone converts 100K euros to Sterling which would give approximately £120,000 Sterling then if they keep it in a Sterling denominated bank account for a year the 10% real-life inflation rate will mean that they would have lost £12,000 purely because of the loss in the purchasing power of the Pound over the year.
The true inflation rate of 10% for the Pound Sterling is partly because of all the money printing, quantitative easing, by the Bank of England combined with record low interest rates that is inflating the money supply and the weak value of the Pound against other currencies. The European central bank has not embarked on Quantitative Easing because it is based in Frankfurt in Germany where they are particularly sensitive about the inflationary aspects of such a move given the hyperinflation that occurred in the Deutchmark during the Weimar Republic after the First World War and so the Euro currency is a better hedge against inflation than the Pound.
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Yes I know you can have a euro account in the UK Jake because we had one for some while, however I would send any large sums back from Spain to the UK, convert to Sterling at current favourable rate still, and wait for Sterling then to strengthen against the Euro as we’ve done before, and then buy Euros back again. We once bought Euros at 1.64 to the pound and dollars at 2.05 to the pound 😉
We’ve been pretty successful playing the currency markets before by buying Euros and Dollars keeping the funds in those currencies and then converting when rates are more favourable, however you have to take a long term view and be prepared to stash the cash so to speak.
However, with current crisis getting worse I’d withdraw funds from Spain anyway for now, and run to the hills with it, or stash it under the duvet as logan says, or simply put it into UK Banks for safety. 😉
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or simply put it into UK Banks for safety.
and which British bank would that be?
Northern Rock?
RBS?
HBOS?
Lloyds TSB?
Even Barclays and HSBC have had some dodgy things written about them this year, as regards Libor fixing and money laundering..who knows what lawsuits may be instigated against them?
Don’t get me wrong, governments will generally try their best to keep banks going and bail them out. Because once one is allowed to go under, the run will spread to other exposed banks.
Mattress time, methinks… 😕
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HSBC probably ‘M’ being one of world’s largest Banks, despite nearly all Banks being dodgy at least the guarantee of £85k will be guaranteed and stay at £85k by UK Gov’t whereas the Spanish Bank and many other Eurozone Banks have guarantees but I wouldn’t trust them if poo hit the fan one day, and anyway your Euro guarantee in Spain would still be Spanish Euros and not German Euros and may become a weakened Club Med Euro bt just my opinion of course.
Santander UK will still be covered by UK Gov’t deposit scheme so at least move monies there from Santander Spain who some think will raid the deposits of their UK organisation if need be, well, that’s what someone in position who works there has said 🙄 🙄 But your 85k per depositor will be safe 😛 Scary stuff if any of this happens though 😯
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It seems as though the latest credit squeeze (Spain paying too much on its bonds) is over.
Of course, it may all have blown up again by the weekend… 😉
In the meantime the premium that Spain’s paying on bond yield has slumped further, and shares (and indeed the Euro) are up.
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The ECB Bond buying which is expected to be announced today will reduce interest that countries like Spain have to pay in order to, wait for it, give more time to implement further and probably more drastic austerity measures so causing more pain and suffering to their own people who will spend even less in the economy and so prolonging the recession in Spain and similar countries. Meanwhile the crooks in charge of Spain and similar countries will ride off to their luxury pads singing as they go. 😆
When the populus cotton on that they’ve been done again expect more civil unrest in Spain 🙄
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Spaniards are now turning to gold as the Euro tumbles, gold now over $1730 per oz:
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Interesting programme on tv tonight was ‘The Property Trap’, but apart from the usual not enough homes being built in the UK, it said that overseas buyers were spending large sums on London and suburbs properties, in particular ‘The Spanish Wealthy’, as they move their Euros out of Spain during the continued Capital Flight from the country.
Clearly they think their money would be safer in UK property than in Spanish property and Banks 🙄
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Prices dropping in much of England now too (as I am finding to my detriment regarding an inheritance).
Prices fall for 3rd month in row – http://www.telegraph.co.uk/finance/economics/houseprices/9586094/House-prices-slip-in-September-says-Halifax.html
But it does mean good news in the long run for the economy. The excessive house price boom was the forerunner to the crash. -
However ‘Nessy’ London and some hotspots are bucking the trend, hence the reason why wealthy Spaniards are now buying in a much safer market (yes, the supply and demand factor, UK needs to build over 400,000 properties a year but not even building half that) than in Spain’s imploding property market which you can Google search as up to date since Spain’s credit rating has been downgraded to junk status, or about to be 😯 🙄 😮
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Seems to be a bit of a North south divide in the UK….as usual. Certainly booming in parts of Surrey, Hampshire. Unusual for a property not to be sold within 3 weeks. Overall fall is 1.4% for last 12 months which is not good but far better than some countries 😀
There was one property in Andalucía featured on a homes in the sun programme today and it has been on the market for 5 years 😯
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