Foreign Perspectives

I came across a rather comprehensive take on how bad things are in the Spanish economy which makes for some interesting, if long, reading.

Spain is one of those places that hasn’t, yet, featured on the news in terms of problems with their banks which is surprising in some ways as it’s not a country that one would ordinarily consider as having strong banks. However, that’s misleading as the countries with the supposedly strong banks have nearly all run into trouble by now but largely because that strength enabled them to start operating on the international stage and thereby pick up problems that they’d not have gotten had they stuck to their domestic market.

Spain is different in that, for the most part, the banks seem to have acted to pull money into the country but that has created something of a problem since, as the article points out, it has created a climate where there’s been a little too much money knocking around. The problem in Spains case is that the developers have used that money to build far too many houses and now find themselves with a rapidly increasing stock of unsold houses.

The solution? Well, the developers would like more money to build even more houses but that glut of houses means that prices are falling rapidly in reality although that doesn’t show up in official statistics as those are based on estimates of the value of the houses rather than what they’re actually selling for. As elsewhere, the list prices of those houses bears little reality to the price at which they are really selling for and therefore it’s very difficult to get a clear picture of what’s really happening. Despite that, it appears that the fall of 50% or so the previous year will be followed by yet more falls to come.

That continued falling of prices spells trouble for the builders. In accounting terms, they’re presently holding them as trading stock but the falls are forcing them to reconsider them as assets for sale. That might satisfy the accountants but unperforming assets are no good to anyone and, of course, they can’t sell them. Nor can they reduce the prices by as much as normal people could because they’d then be into potentially serious losses.

In fact the solution seems to be to let a significant proportion of the developers go bankrupt and reduce building to more normal levels thus letting the stock of unsold homes find buyers. Not an easy solution but then if, as seems likely, we’re heading into a depression rather than a recession then no solution is going to be an easy one… last time around it took WW2 to get us out of it.

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One problem with Spain is that in the summer some areas are just way, way too hot.

Madrid is one of those which means that the best time to see it is around now or if you can’t go soon then in late September when it’s cooled down again. That’s about the best time to see some of the fantastic sights around Madrid too such as the lovely city of Segovia which in many ways is better than Madrid itself as it’s a much more approachable city without quite so much of the over crowding that you often get in Madrid.

Although it’s a great place to see, Segovia hotels aren’t nearly so thick on the ground as Madrid hotels so you might find that it’s easier to base yourself in Madrid and do Segovia as a daytrip if you don’t book far enough in advance. Much better the other way round though if you can manage it.

Similarly cute is Toledo although which you can also reach in around an hour from Madrid although south of the city this time. As with Segovia, Toledo hotels aren’t nearly as numerous as those in Madrid so it’s usually best to book that little bit more in advance if you can.

Everybody’s already seen Madrid but Segovia and Toledo are something that little bit different. Quieter, yes, but no less interesting and a whole lot easier to grasp than the sprawl of Madrid.

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One thing that constantly confuses is that whenever we have a trip to Spain the diesel that we’ve bought there seems to last considerably longer than when the diesel that we ordinarily buy in France.

A LOT longer too. For example, we filled the car up Friday a week ago in Spain, have been running around quite a bit during the week and only needed to get some more last Friday. Ordinarily we’d have been expecting to top up at least once during the week.

Weird, huh?

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