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The word “Schadenfreude” is a German word that means taking pleasure from other peoples misfortune. The reason why I mention this is because for many years during the long spanish housing boom the British expats who owned property in Spain had a smug attitude that they were pleased with soaring house prices because they were benefiting from it and some boasted about how much their properties have gone up in value. Many properties rose in price by as much as 300% during the boom.
However, since the 2007/2008 crash house prices have fallen by at least 50% since the height of the boom and are set to fall a further 50% resulting in a 75% to 80% drop in house prices, returning prices back to what they were prior to the 300% increase in prices started.
Evidence for the 80% slump in house prices is reflected by the fact that a Spanish bank has recently sold off some of its distressed/repossessed properties that were on its books that were valued at 200,000 euros at the height of the boom and offloading them for just 40,000 euros which makes it a 80% price reduction.
The smug and boastful British expats who bragged about how much their spanish properties were worth are no longer laughing anymore and instead they are laughing out of the other side of their faces. They thought that the Spanish property market works in the same way as the British property market but they were very mistaken. In Spain there is capital gains tax to pay of 18% on any rise in the value of the property whereas in Britain there is no capital gains tax on selling property if it happens to be your main residence. Also, there is 10% tax to pay when buying property in spain and the buyer has to contribute to the estate agent fees of the seller together with all the other costs of buying property in spain means that people have to stump up 15%-20% of the property value in costs when buying a property in spain. In Britain if you cannot keep up your mortgage payments you can rent out the property to cover the mortgage costs whereas this is impossible in Spain because of the seasonal nature of the rental market in that demand for rented property occurs mostly during the summer months. Buy-to-let does not work in Spain.
I have a confession, I am delighted that these expats who were so smug and arrogant are getting their comeuppance at long last and seeing all their capital gains completely wiped out. I wonder how many other people on this forum feel that same way as me?
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Jakesuper
You displayed similar schadenfreude before you were banned as “Desolation” when you targetted a member called Faltenborg (or something like that) just because he had recently bought a property in Spain with a budget of c 750k euros. You resented his success and posted bile because you have a budget which is rather modest in comparison. That’s a sad way to view and live your life, and tediously boring to read.
With posts like these, you reduce the value of this forum. It’s time you left
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With so many lives ruined (you only have to read Itsme’s very sad posts on here, and she’s just the tip of a big iceberg), what does it achieve by someone posting that they take pleasure in other people’s misfortune? Similarly, the OP (in another guise) made a personal attack on another poster by taking mawkish pleasure out of the fact that he could potentially lose a fortune because he had just bought a fine villa somewhere on the costa.
Infrequent poster or not, I found the content not only pointless, but insensitive and offensive, and have every right to pass comment that I think he should move on, because I feel posts like these do this site no favours. To take pleasure in peoples’ financial (and possibly personal) ruin during this bust is, in my opinion, nothing short of perverse. For every greedy speculator who lost out, there are many innocents who stand to lose everything.
Being a regular poster means nothing in itself – it’s the suitability of the content and how it can help and direct others that matters. I’m indebted to this website. I’ve learnt so much from the likes of Shakeel, Fuengi, Angie, Katy, Chopera and Logan (to name but a few) who are, or have been, at the coal face and speak with authority. I don’t have that experience. I came to this forum from a place of complete ignorance and am still learning, so my input has been very limited. It’s not (or shouldn’t be) about the number of postings; your comment adds another post to your name, and this adds one to mine. So what? Ultimately, neither this reply nor yours adds any value whatsoever to this forum and helps no one.
We’ll simply agree to disagree. I have no more to add on this and shan’t be commenting any further. This thread has already taken up too much space.
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Snowy, I wouldn’t take any notice of peterhun, he tried telling me not to have a go at AN Other not so long ago but said nothing about this poster’s vitriol towards some of us, a bit one sided peterhun is in that respect 🙄
It doesn’t matter how many posts you’ve made, if you want to say something then say it and I’m glad you’ve found a group of us useful to you which is what it’s all about 😉
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@katy wrote:
confrontational.
As are you two, at times.
You don’t own this forum, stop attacking other posters because you don’t like what they say. if you don’t like a poster, ignore him/her.
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Depends what you consider confrontational. If it’s challenging posters spouting rubbish and untruths then yes I am. I don’t start threads with old news and then don’t give my view or participate! Do you own the forum then….who are you to tell me, why not piss off and join in the trolls threads with your opinions 💡 Even an idiot like you must acknowledge that their is a general consensus that this guy is a troll and troublemaker.
It is one thing to say that many British are stuck with illegal properties to warn other people but not to gloat about it like the troll.
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peterhun it’s you who say ‘you don’t own this forum’ we don’t say we own it. We don’t moderate it either, and BTW you’re also found on other forums too which you’re entitled too.
When you are so blinkered that you turn a blind eye to vitriolic posts about us it gives a profile of you, we know you supported the agent too!
Then you decide to post rubbish about the number of posts Snowy has made, so what, and Snowy has openly said on here that he’s gleaned a lot of help from at least 6 of us posters so is that wrong? As Snowy says, ‘so many lives have been ruined in Spain by their property corruption/scams’, if Snowy points out that someone under another name has been banned elsewhere and it’s true, what’s wrong with that? BTW, If you read the post about jake, you’ll see I said he does post some relevant topics sometimes, and others here can make their own minds up whether to ignore him or not.
You’re one sided peterhun! 😡
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Hi,
As a long time on/off lurker the responses to Jakesuper made we want to finally post ! I think Jakesuper has a valid perspective. Yes a bit confrontational, but he represents a voice that is rarely heard but believe me is simmering like a boiling pot…..
The older generation have grabbed up property, bid up the prices with money borrowed out of thin air and are now complaining about the air bursting from this giant bubble. Since Nixon closed the gold window in 1971 money has become confetti backed by nothing. But the older generation lapped this up with gusto, voting in government after government after government throughout the West who spent far more than they took in and allowed the banks to print print print into oblivion. A blind eye was turned to the developing problem of deficits and debt because ‘I’m alright Jack my house has just gone up’ and ‘Woohoo I’m rich and can retire early in Spain’… So now, after 40 years of almost continuous inflation in property prices we now live in an era of Property Apartheid. This has destroyed the social fabric of many countries and pits young against old, and those who can borrow even more confetti against those that can’t. How exactly is a young person whether in UK, Spain or wherever, just starting out in life, supposed to get ahead in this world? Where do they live, in some old geezers BTL empire?
Look, I am very sorry for the ruined lives of people who bought over-priced property in Spain. I have personal experience of this in my family. But no one forced anyone to buy. I repeat that because it is stark but absolutely reality, no one forced anyone to buy anything. Who’s fault is it they didn’t think it through, think of all the angles and the risks? Rose coloured glasses and ‘every one else was doing it’ don’t change the outcome. Is it Jakesupers fault?? Many older people in fact recklessly leveraged themselves up against their inflated property back home. That by definition, like it or not, makes you a speculator.
Did people not think at the time in the back of their minds that this whole ponzi scheme wasn’t fair, or sustainable or right ???? Payback is a b***h as they say, and the bill has come due……. I’m sorry but there are young people today who face pretty grim futures due to the absolutely recklessness of voters in the last 40yrs. Schadenfreude? No we just want a decent opportunity to make a life without being shackled by property poverty.
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@wttw, I think that’s a good post and you make some very good points, many of which I agree with. However there’s a difference between thinking that some of the people suffering shouldn’t receive any special sympathy (which is what I think you are saying) and actively taking pleasure from all the suffering taking place (which is what jakesuper seems to be doing). If someone has sold their property in the UK, retired early and blown it all in Spain then really I couldn’t care less for them, but I don’t enjoy seeing people in that situation. However if someone has taken due care in making a property purchase only to find they have been conned by the local officials or agents into buying an illegal property then I do have sympathy for them. You can’t tar everyone with the same brush.
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@Chopera wrote:
if someone has taken due care in making a property purchase only to find they have been conned by the local officials or agents into buying an illegal property then I do have sympathy for them. You can’t tar everyone with the same brush.
Absolutely. Couldn’t agreed more.
But the vast majority of expats who bought in Spain are not in that situation. Many felt they’d made it on the lottery. Bought a house years ago sold it and retired early in Spain for many multiples what they paid. Taking their bubble gains from one ponzi scheme (UK) to another in the making (Spain) meanwhile putting the burden of massively over-priced property back home (UK) on the backs of the younger generation.
And now it’s gone sour has it?
Sorry if I don’t have the energy for sympathy, I have a 3.5hr daily commute and punishing mortgage payments to worry about.
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Chopera,
If it wasn’t for sky high property prices I would have emigrated to Spain twenty years ago but alas no, I couldn’t go to Spain because they decided to embark on a crazy and barmy housing boom which mean’t that I had to stay in another deranged country called England. I used to think that Britain was the most corrupt country on earth until I found out the shenanigans that go on in Spain, particularly concerning its housing market. It made me angry and see red when the British expats were bragging about the value of their properties in Spain in much the same people bragged about the value of their properties in the UK.
I couldn’t care less about house prices in Britain because I don’t want to be in Britain but it made me stark raving mad that the same people who denied me the right to own a home in Britain and by consequence denied me the right to have children and have a family of my own to then turn around and do the same thing and deny me the right to own a home of my own and have a family of my own and deny me the right to have children in another country like Spain.
All those ridiculous property programmes on British television like Channel 4’s programme “A Place in the Sun” with Amanda Lamb and people like Jasmine Harman made me sick and are the same kind of garbage who were property ramping abroad as were Kirsty Allsopp and Phil Spencer who were talking up the property market in the UK using their garbage television programme “Location, Location, Location”.
Amanda Lamb once hosted a TV programme predicting stellar high property price rises across the whole of Europe which only encouraged the fly-to-let or jet-to-let craze in which people would go abroad and do buy-to-let there but the property markets in continental Europe are a very different animal to the way it works in the UK.
The wierd property obsession of people in the UK helped to fuel the Spanish housing boom because people in the UK were using the rises in the value of their properties to buy properties in Spain which just helped to push up house prices in Spain. The Spanish saw the British coming and knew that they can charge anything they wanted for property because the British were so used to paying high prices for property in the UK and the British so often left their brain at the airport and thought that they should pay northern european house prices for property in Spain when the Spanish knew fully well that the prices were ridiculous but the British buyers fell for it hook line and sinker because property prices were rising fast in Spain and feared on missing out on the great Spanish property boom and besides it was after all financed on borrowed money anyway so it wasn’t really their money but the bank’s money that was at risk and they only needed to worry about keeping up the mortgage payments rather than paying off the loan in order to own a piece of paradise in the Sun.
Now that things have gone pear shaped in Spain whereas the property market still seems to be holding up in the UK, it leaves the people who bought property in Spain wondering when their Spanish property nightmare will ever end.
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I would agree with most of that jakesuper apart from being confused about why a country or ‘?’ whether in the UK or Spain ‘deny you the right to have children’.
I’ve got two children and they are the biggest responsibility you could ever imagine. When you have children you’ll do whatever you can to protect them. You want the world to do right for them. It worries me that you seem to think that you have been denied it in such an angry way?
The ‘boom and bust’ mixed with corrupt bank workers has stuffed us for what may be 26 years (depends on which is quicker, selling the flat or paying off the mortgage). I’m angry and probably more so because I wish that we didn’t have to give a cheating bank 500 euros per month as i’d rather be saving that money for when my children are older.
If you want to buy a place in Spain now could be your chance. We have a 108,000 euro mortgage and others can buy a flat in our block for 20,000 euros. I know which price I would rather pay and which one is a manageable amount to have a life with as well.
Also, if I had also bought a one bedroom flat in Steatham, London, which I viewed in 1999 I would have been laughing at the gains I would have made. My bad luck/decision that I was too scared to make the purchase. A friend did buy in south London and made a 100k profit. It’s whichever road you take at the crossroads of life I guess.
The property market in Spain will never be like the UK, they are chalk and cheese. Agreed though that too many Brits were mugs and took big property gains to Spain to try to be buy to let investors just because the tv programmes said that they could. I wouldn’t say that i’m glad that they are suffering, I think that the whole corrupt system is very, very sad more than anything.
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@jakesuper wrote:
Chopera,
If it wasn’t for sky high property prices I would have emigrated to Spain twenty years ago but alas no, I couldn’t go to Spain because they decided to embark on a crazy and barmy housing boom which mean’t that I had to stay in another deranged country called England. I used to think that Britain was the most corrupt country on earth until I found out the shenanigans that go on in Spain, particularly concerning its housing market. It made me angry and see red when the British expats were bragging about the value of their properties in Spain in much the same people bragged about the value of their properties in the UK.
20 years ago property prices were dirt cheap in Spain and the UK. If you had the chance to buy then (either in the UK or in Spain) and didn’t then you’ve only got yourself to blame. The people I pity are those who never had a chance – people currently in their 30s who have had to put up with high house prices for 10 years, and could be forgiven for buying into the bubble because sitting in rented property while you watch prices go stupid over such a long period is highly stressfull. People start thinking that if this goes on for another 5 years then they might never buy a house.
@jakesuper wrote:
I couldn’t care less about house prices in Britain because I don’t want to be in Britain but it made me stark raving mad that the same people who denied me the right to own a home in Britain and by consequence denied me the right to have children and have a family of my own to then turn around and do the same thing and deny me the right to own a home of my own and have a family of my own and deny me the right to have children in another country like Spain.
Owning a house is not actually a requirement for having children. Especially in Spain where rents are relatively low and tenants highly protected by the law.
@jakesuper wrote:
All those ridiculous property programmes on British television like Channel 4’s programme “A Place in the Sun” with Amanda Lamb and people like Jasmine Harman made me sick and are the same kind of garbage who were property ramping abroad as were Kirsty Allsopp and Phil Spencer who were talking up the property market in the UK using their garbage television programme “Location, Location, Location”.
Amanda Lamb once hosted a TV programme predicting stellar high property price rises across the whole of Europe which only encouraged the fly-to-let or jet-to-let craze in which people would go abroad and do buy-to-let there but the property markets in continental Europe are a very different animal to the way it works in the UK.
I agree completely. I have always hated the dogma spread by the media that high property prices are somehow good. There’s nothing good about high property prices whatsoever.
@jakesuper wrote:
The wierd property obsession of people in the UK helped to fuel the Spanish housing boom because people in the UK were using the rises in the value of their properties to buy properties in Spain which just helped to push up house prices in Spain. The Spanish saw the British coming and knew that they can charge anything they wanted for property because the British were so used to paying high prices for property in the UK and the British so often left their brain at the airport and thought that they should pay northern european house prices for property in Spain when the Spanish knew fully well that the prices were ridiculous but the British buyers fell for it hook line and sinker because property prices were rising fast in Spain and feared on missing out on the great Spanish property boom and besides it was after all financed on borrowed money anyway so it wasn’t really their money but the bank’s money that was at risk and they only needed to worry about keeping up the mortgage payments rather than paying off the loan in order to own a piece of paradise in the Sun.
Now that things have gone pear shaped in Spain whereas the property market still seems to be holding up in the UK, it leaves the people who bought property in Spain wondering when their Spanish property nightmare will ever end.
The main driver behind the Spanish property bubble were the banks and the euro, which together caused cheap credit to flood into Spain. It may come as a surprise but by far the biggest buyers of Spanish property are the Spanish themselves, and they are also property obsessed. Of course the influx of Brits had an effect but a lot more Spanish bought into the boom using 30 or even 40 year mortgages, convinced that prices only went up in Spain.
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If it wasn’t for sky high property prices I would have emigrated to Spain twenty years ago but alas no, I couldn’t go to Spain because they decided to embark on a crazy and barmy housing boom which mean’t that I had to stay in another deranged country called England. I used to think that Britain was the most corrupt country on earth until I found out the shenanigans that go on in Spain, particularly concerning its housing market. It made me angry and see red when the British expats were bragging about the value of their properties in Spain in much the same people bragged about the value of their properties in the UK.
I couldn’t care less about house prices in Britain because I don’t want to be in Britain but it made me stark raving mad that the same people who denied me the right to own a home in Britain and by consequence denied me the right to have children and have a family of my own to then turn around and do the same thing and deny me the right to own a home of my own and have a family of my own and deny me the right to have children in another country like Spain.
i have been reading this forum with interest for some considerable time and have gained a greatdeal of useful and relevent information gained from peoples personal experiance of the spanish property market .
i thought i would just add my comments on the above rant , people buy property both in the uk and overseas for there own personal reasons some right , some wrong who knows ? but its there choice and they will have to live with the consequences of that decision .
but nobody could physically stop you from buying a property either in the uk or spain or indeed having a family !!! whilst you are pointing the finger at other people there are three fingers pointing back at you !! ….. grow a pair and take responsability for your own inadequacies …. if you dont want to be in the uk your are free to leave at anytime … but that would that actually require making a decision and living with the consequences … then there would be nobody else to blame … i guess taking personal responsability is not a strong point . -
What makes the Spanish property market so different from the British property market is that Spain has a vast number of unsold homes on the property market. Some estimates put it as high as 1.5 million homes that are vacant. At one time Spain was building more houses than France, Germany and Italy combined. This vast over-supply of properties together with a sharp drop in demand for properties because of the euro-zone crisis and Spains dire economic problems means that prices for property have fallen quite dramatically. The property market is also driven by sentiment. During the boom there was the perception that house prices could only go up but now that perception has changed completely and people are expecting that house prices will keep on falling for many years to come which will only ensure that fewer people buy property in Spain for fear that it will drop in price which will in turn cause prices to fall even further.
Many British expats somehow arrogantly assumed that the Spanish property market behaves in much the same as the property market in Britain but they have made a very incorrect assumption. As the boom got underway in Spain more properties were built to meet demand and it got to the stage where developers were anticipating an ever increasing demand for properties in Spain which in turn lead to even more properties being built but the increasing demand that the developers were expecting began to dry up and fall dramatically and this has left a huge number of properties having been built with no buyers wishing to buy them.
There are now a huge number of estates that have been built in Spain that were deliberately targeted to the British second home buyers that are now largely vacant and anybody owning properties in these estates will know that most of the properties that surround them are lying empty and the estates are like ghost towns and the people who own these properties will be unable to ever sell their properties because there is so much property available which means that their properties are effectively worthless because nobody wants to live in a derelict estate.
What makes matters even worse for those expatriates who own property in Spain is that eventually Spain will be forced to abandon the Euro and revert to using the Peseta which will result in a massive devaluation in the value of the Peseta of almost 50% which will in turn lead to rising inflation and sharply rising interest rates, forcing many people who will have mortgages in Pesetas to struggle to keep up with rising mortgage interest payments and this will cause more distressed properties to come onto the market depressing house prices even further. Rising inflation and interest rates will lead to more bankruptcies and job losses causing unemployment to rise even further which will force homeowners to put their homes onto the market because they cannot keep up the mortgage payments because they lost their job and cannot find another and this will have the effect of lowering house prices even further.
The result of the devaluation of the Peseta together with the grim consequencies this will have on the Spanish economy will mean that you can at some point look forward to the day when you can buy a three bedroom house in the costa-del-sol for as little as £10,000 (pounds sterling) and that is no joke!
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@jakesuper wrote:
What makes the Spanish property market so different from the British property market is that Spain has a vast number of unsold homes on the property market. Some estimates put it as high as 1.5 million homes that are vacant. At one time Spain was building more houses than France, Germany and Italy combined. This vast over-supply of properties together with a sharp drop in demand for properties because of the euro-zone crisis and Spains dire economic problems means that prices for property have fallen quite dramatically. The property market is also driven by sentiment. During the boom there was the perception that house prices could only go up but now that perception has changed completely and people are expecting that house prices will keep on falling for many years to come which will only ensure that fewer people buy property in Spain for fear that it will drop in price which will in turn cause prices to fall even further.
If I built a million extra homes on the north coast of Scotland, how much would that affect UK house prices in general? An over supply of property will only affect the property market in the localised areas where the over supply exists. An over supply of credit however will affect the property market on a national level, because everyone will have access to that credit. Hence the Spanish boom was mainly driven by credit (and yes, sentiment does play a part as well)
@jakesuper wrote:
Many British expats somehow arrogantly assumed that the Spanish property market behaves in much the same as the property market in Britain but they have made a very incorrect assumption. As the boom got underway in Spain more properties were built to meet demand and it got to the stage where developers were anticipating an ever increasing demand for properties in Spain which in turn lead to even more properties being built but the increasing demand that the developers were expecting began to dry up and fall dramatically and this has left a huge number of properties having been built with no buyers wishing to buy them.
It’s not arrogant to assume the Spanish property market behaves in much the same as the property market in Britain. Mistaken certainly, but not arrogant.
@jakesuper wrote:
There are now a huge number of estates that have been built in Spain that were deliberately targeted to the British second home buyers that are now largely vacant and anybody owning properties in these estates will know that most of the properties that surround them are lying empty and the estates are like ghost towns and the people who own these properties will be unable to ever sell their properties because there is so much property available which means that their properties are effectively worthless because nobody wants to live in a derelict estate.
If nobody wants to live in these estates then their existence will have no effect on the property market. It’s tough for the people who did end up buying into those estates, but I’ve seen worse. I know of Spanish people who bought off plan in areas around Madrid, pumping thousands into cooperativas only to find the council has placed the development of that area on hold, and they can’t get their money back.
@jakesuper wrote:
What makes matters even worse for those expatriates who own property in Spain is that eventually Spain will be forced to abandon the Euro and revert to using the Peseta which will result in a massive devaluation in the value of the Peseta of almost 50% which will in turn lead to rising inflation and sharply rising interest rates, forcing many people who will have mortgages in Pesetas to struggle to keep up with rising mortgage interest payments and this will cause more distressed properties to come onto the market depressing house prices even further. Rising inflation and interest rates will lead to more bankruptcies and job losses causing unemployment to rise even further which will force homeowners to put their homes onto the market because they cannot keep up the mortgage payments because they lost their job and cannot find another and this will have the effect of lowering house prices even further.
The result of the devaluation of the Peseta together with the grim consequencies this will have on the Spanish economy will mean that you can at some point look forward to the day when you can buy a three bedroom house in the costa-del-sol for as little as £10,000 (pounds sterling) and that is no joke!
Spain leaving the euro would actually help these people. A devalued peseta would make the properties more attractive to foreign buyers and, provided their mortgage is in pesetas as well, they might avoid negative equity. Spain’s problem is that it has on overvalued currency, devaluing it would be part of the solution
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@Chopera wrote:
Spain leaving the euro would actually help these people. A devalued peseta would make the properties more attractive to foreign buyers and, provided their mortgage is in pesetas as well, they might avoid negative equity. Spain’s problem is that it has on overvalued currency, devaluing it would be part of the solution
Chopera,
I totally disagree with you with your argument that Spain leaving the Euro will be helpful. When Spain finally crashes out of the Euro it will be an absolute disaster for Spain. The Peseta will be devalued and end up a worthless currency and this will cause inflation to go ballistic resulting in interest rates going sky high. The rising inflation and rising interest rates will cause many businesses to go under and will result in many people being thrown out of work and unable to pay the rocketing interest rates on their mortgages. Anybody owning a property in spain will crash and burn and will be cooked alive and end up toast. Spain is heading for hyperinflation, mass unemployment, a stellar high divorce rate, suicides going through the roof resulting in graveyards becoming full and the crematoriums working round the clock to cope with the all the dead bodies of people left with no hope and fearful of the future.
There will be no floor to how low house prices will go when Spain crashes out of the Euro!
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@jakesuper wrote:
@Chopera wrote:
Spain leaving the euro would actually help these people. A devalued peseta would make the properties more attractive to foreign buyers and, provided their mortgage is in pesetas as well, they might avoid negative equity. Spain’s problem is that it has on overvalued currency, devaluing it would be part of the solution
Chopera,
I totally disagree with you with your argument that Spain leaving the Euro will be helpful. When Spain finally crashes out of the Euro it will be an absolute disaster for Spain. The Peseta will be devalued and end up a worthless currency and this will cause inflation to go ballistic resulting in interest rates going sky high. The rising inflation and rising interest rates will cause many businesses to go under and will result in many people being thrown out of work and unable to pay the rocketing interest rates on their mortgages. Anybody owning a property in spain will crash and burn and will be cooked alive and end up toast. Spain is heading for hyperinflation, mass unemployment, a stellar high divorce rate, suicides going through the roof resulting in graveyards becoming full and the crematoriums working round the clock to cope with the all the dead bodies of people left with no hope and fearful of the future.
There will be no floor to how low house prices will go when Spain crashes out of the Euro!
You are sort of right but look at what happened to Iceland after they took the none IMF route. They put their people first and told the international banks to sod off. What are the alternatives really? At the way it’s going now it will take ages for Spain to recover instead of a quite quick harsh cold shower. The only positive outcome of this is that it forces Spain to change their ways but I’m doubtful that they will do it.
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“You are sort of right but look at what happened to Iceland after they took the none IMF route. They put their people first and told the international banks to sod off. “
Not so, Iceland was bailed out. The international lenders are still being paid interest and the people got royally screwed. Iceland is the only country, that I know of, that has index linked mortgages. When inflation went up to 22% the nations mortgage debt went up the same amount.
The country has to pay a lot to borrow and the only people who will lend are border-line mafia. The economy is stuffed due to the illegal capital controls -nobody wants to invest there.
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@jakesuper wrote:
@Chopera wrote:
Spain leaving the euro would actually help these people. A devalued peseta would make the properties more attractive to foreign buyers and, provided their mortgage is in pesetas as well, they might avoid negative equity. Spain’s problem is that it has on overvalued currency, devaluing it would be part of the solution
Chopera,
I totally disagree with you with your argument that Spain leaving the Euro will be helpful. When Spain finally crashes out of the Euro it will be an absolute disaster for Spain. The Peseta will be devalued and end up a worthless currency and this will cause inflation to go ballistic resulting in interest rates going sky high. The rising inflation and rising interest rates will cause many businesses to go under and will result in many people being thrown out of work and unable to pay the rocketing interest rates on their mortgages. Anybody owning a property in spain will crash and burn and will be cooked alive and end up toast. Spain is heading for hyperinflation, mass unemployment, a stellar high divorce rate, suicides going through the roof resulting in graveyards becoming full and the crematoriums working round the clock to cope with the all the dead bodies of people left with no hope and fearful of the future.
There will be no floor to how low house prices will go when Spain crashes out of the Euro!
Most analyses I’ve seen estimate a 30% to 40% devaluation if Spain left the euro (similar to the pound a few years ago). Although I think those estimates are conservative, we’re not talking about a worthless currency here.
Yes there would be imported inflation to begin with, and yes there would be monetary inflation as the government increases the supply of pesetas to pay off debts and stimulate growth. So initially there would be a shock but in the medium term the Spanish economy would pick up as Spanish products become cheaper, exports increase, more people visit Spain and spend money, and the debt burden reduces. This is pretty standard stuff – it’s what the IMF does when it rescues countries with such difficulties, and it usually works.
Having said that I personally would like Spain to stay in the euro a bit longer, as it is forcing the Spanish government to take some tough decisions regarding things like labour law, that it would otherwise side step. It’s just stupid that it has to carry out these reforms during a deflationary recession.
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@peterhun wrote:
“You are sort of right but look at what happened to Iceland after they took the none IMF route. They put their people first and told the international banks to sod off. “
Not so, Iceland was bailed out. The international lenders are still being paid interest and the people got royally screwed. Iceland is the only country, that I know of, that has index linked mortgages. When inflation went up to 22% the nations mortgage debt went up the same amount.
The country has to pay a lot to borrow and the only people who will lend are border-line mafia. The economy is stuffed due to the illegal capital controls -nobody wants to invest there.
You probably missed the part about them making all private loans tied to foreign currencies “even old ones” illegal so the inflation actually ate their debt burden up. They also let the investors take a big hit but decided to stand by it’s deposit guarantees. This is not the planned route for a euro exit for example with keeping all loans in other currencies while their new currency will fall in value. This made a lot of international bankers very sad puppies since their plan didn’t go through to make the icelanders mere slaves under their puppetry. The reason this route is not talked about is because they don’t want other countries to follow their path. Sure new loans will have higher interest rates but Icelanders don’t really need new loans.
http://uti.is/2011/11/iceland-successful-recovery-and-the-non-bail-out-banking-myth/
http://uti.is/2012/03/iceland-is-doing-pretty-well-thank-you-except-in-fdi/
That is what no other country has done. Iceland is doing considerable better than for example Ireland as a result of it with a much future chances to get out of the mess. Ireland will burn when their “assets” true value hare pulled from out under rugg while Iceland have nothing else to fear about.
What’s bad about the normal bailouts is that the investors get a big chunk of the money which gives incentive in the future to be reckless.
*edit damn I have totally missed the part about the indexed debt. This totally destroys my main point for taking their route. At least it goes to the owners of the banks which in most cases are the government. Which makes it easier to pay of their international debt. Still may not be as bad as I thought.
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@jakesuper wrote:
I totally disagree with you with your argument that Spain leaving the Euro will be helpful. When Spain finally crashes out of the Euro it will be an absolute disaster for Spain.
The Peseta will be devalued and end up a worthless currency and this will cause inflation to go ballistic resulting in interest rates going sky high.Why?
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