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Justin,
feel that some on the thread missed the important points you were making about authorities spending (and their lack of money) and the serious situation in Spain regarding umemployment especially for the yonger generation.
Lines outside jobs centres (from 4AM) show a desparate situation, that will only worsen over 2012.
As for lights last evening, here in Dubai, the whole place was lit as if day, they seem to add more each day - and yes the Xmas decorations are up (mainly for the visitors and ex pats I might add).
But we are seeing price increase just filled up the Range Rover Sport from near empty and it cost about 10 Euro.
David
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Legal tip 527. On Europe, Banks and Spain
15 May 2011 @ 17:11
All is about Euro-balance. We all, Europeans countries and EU´s financial authorities have our part.
The article below was written by Paul de Grauwe in 1998!
Pay special attention to the paragraph in bolds.
http://www.econ.kuleuven.be/ew/academic/intecon/Degrauwe/PDG-papers/FT_articles/FT%201998%2002.htm
THE EURO AND FINANCIAL CRISES
Published in the Financial Times, 1998.02.20
Can a financial crisis similar to the Asian one erupt in Europe? Our immediate answer is negative. These disturbing financial upheavals occur in “emerging” markets not in the bastions of stability that are found in Europe. The conditions that led to the financial crises in Asia are just not present in Europe.
The question of whether financial crises of the Asian kind can happen in Europe should not be brushed aside too lightly, however. From the Asian financial debacle we have learned the following about the conditions that can lead to financial instability. First, capital markets are liberalised creating the potential for vast international movements of financial assets. Second, countries keep their exchange rates pegged creating the perception that there is little risk involved moving funds from one market to the other. Third, the monetary regime (including the system of regulatory control) is not adapted to the new regime of liberal capital markets. These three factors have been present in one way or the other in the financial crises in Asia, but also in Latin America during the 1970s and 1980s. Of course, they do not always lead to disaster. There are also examples of countries that have avoided financial disturbances despite the fact that they went through the same process of liberalisation. Nevertheless it is fair to conclude that these three factors substantially increase the probability of major crises.
So, are these factors to be found in today’s Europe? Obviously not. But Europe is soon going to move into EMU creating a totally different financial environment. It can be argued that the factors that create the conditions for financial disturbances may very well emerge in the future EMU.
EMU is certainly going to dramatically increase the degree of capital mobility within the euro area. Today, it is still the case that European capital markets are relatively closed. Financial institutions and insurance companies in Germany, France, Italy, etc. hold an overwhelming share of their total portfolio (often more than 90%) in domestic assets. The complete elimination of foreign exchange risk following the introduction of the euro and the disappearance of regulatory constraints on the holdings of “foreign” euro assets will change all that, leading financial institutions to dramatically increase their holdings of “foreign” euro-assets. The result will be to open up financial markets in Europe in a more profound way than in the 1980s when most European countries eliminated their systems of capital controls. The size of the funds that will be freely moving within the euro area will make a quantum jump.
Against the background of this dramatic liberalisation of Europe’s financial markets there is the fact that the regulatory and institutional environment will not be adapted. Prudential control will still be done at the national level. This will handicap the regulators in assessing the risk of the institutions under their jurisdiction. In addition, financial institutions in each country of the euro area will, at least initially, overwhelmingly be national. The German financial markets will be dominated by German financial institutions, the French markets by French institutions, etc. Thus, institutionally the financial markets will still have a substantial domestic segmentation. This will make it difficult to efficiently spread the risk of asymmetric economic shocks, i.e. economic shocks occurring in one country and not in others.
The conditions that could lead to financial disturbances will, therefore, be present in the future euro area, at least during its initial phase when institutions have not yet adapted to the new environment. This, of course, does not mean that crises must inevitably occur. In order to gauge the risk of such occurrence let us analyse a particular scenario.
Suppose a country, which we arbitrarily call Spain, experiences a boom which is stronger than in the rest of the euro-area. As a result of the boom, output and prices grow faster in Spain than in the other euro-countries. This also leads to a real estate boom and a general asset inflation in Spain. Since the ECB looks at euro-wide data, it cannot do anything to restrain the booming conditions in Spain. In fact the existence of a monetary union is likely to intensify the asset inflation in Spain. Unhindered by exchange risk vast amounts of capital are attracted from the rest of the euro-area. Spanish banks that still dominate the Spanish markets, are pulled into the game and increase their lending. They are driven by the high rates of return produced by ever increasing Spanish asset prices, and by the fact that in a monetary union, they can borrow funds at the same interest rate as banks in Germany, France etc. After the boom comes the bust. Asset prices collapse, creating a crisis in the Spanish banking system.
Too far fetched to be realistic? The US monetary union provides many examples of such local booms and busts followed by financial crises that lead to large scale bail-out operations. Scenarios of local booms and bust, as the one just described, will almost certainly happen in the future euro-area. The essential ingredient triggering such crises is the existence of regional differences in rates of return on assets coupled with the fact that in a monetary union banks can borrow at the same interest rates.
These future euro financial crises, however, will in one crucial aspect be different from the financial crises recently experienced in Asia. They will not lead to speculative crises in the foreign exchange markets. Thus, if Spain is confronted by a banking crises this will not spill over into the Spanish foreign exchange market because there will be no such market. One source of further destabilisation of the markets will, therefore, be absent.
The founders of EMU have taken extraordinary measures to reduce the risk of debt default by governments. Maastricht convergence criteria and a stability pact have been introduced to guard EMU from the risk of excessive government debt accumulation. The Asian financial debacle teaches us that excessive debt accumulation by the private sector can be equally, of not more, risky. This has escaped the attention of the founders of EMU, concerned as they were by the dangers of too much government debt. In the meantime the EMU-clock is ticking, while he institutions that should guard EMU from financial and banking crises have still to be put into place.
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Maria L. de Castro, JD, MA
Lawyer
Director www.costaluzlawyers.es
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Maria,
good post.
Listening to Bloombergs this AM the following scenario is being played out:
The Germans are getting fed up with other countries (in the Euro) not taking the required measures to pay back their loans) and as such could go back to DM. All the other countries will stay in Euro, including Spain, italy and greece and would need to devalue by 30%.
David
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"But we are seeing price increase just filled up the Range Rover Sport...."
Tough times eh David? 
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info@soltecspain.com www.soltecspain.com
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David, unless oil prices have decreased in the last two years, you haven't been able to fill up a car like that for Dhs 50 in at least the last ten years in Dubai, if not more! The last time I filled my Discovery in Dubai in 2009 it cost about Dhs100 from empty. Still cheap compared to here though! 
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Petrol cheaper than ever, seems to be going down although government have thought of putting a 'green tax' on it has not happened. No car tax and prices around 40% of UK.
Yes it cost about 10 Euros this AM.
David
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i am sorry but it seems to be getting worse if that is possible,in france today two of its top banks have gone bust .need help.france is getting it very bad.if you go to youtube the german top banks has said the euros is doomed.their is nothing any body can do .to much money loaned out .the european parliment cannot loan out any more.cbs new this mirning.the european economy is collapsing.and the bbc news said that they are calling a emergency meeting in one hours time.so all we can do is keep our fingers crossed and hope some one quick finds a solution.
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Bob order me a Pint of what you are on I follow the BBC business pages everyday and no French banks have declared Bancruptcy
Its all good news today http://www.bbc.co.uk/news/business/
Rod
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Sorry but maybe you ain’t seen nothing yet. My article in next week’s EWN (Are the Costas the Next Dunkirk), drawing on the experiences of previous collapsed economies, will have you heading for the airports. Here is a snippet. It is clunking into place:
“When a currency collapses life as we know it ceases within hours. You quickly learn how to survive without money; you don’t have a choice. Banks and cash points are sealed; if they operate at all only limited amounts are available. Money loses its value; you need €500 to purchase what used to cost €100. There is a change in the public psychosis; many panic.
Almost all government and city departments cease to function; rubbish piles high in unlit streets, medical centres no longer prescribe drugs. Crime goes through the roof and the authorities are ineffectual in dealing with growing scales of crime. Vigilantes are formed, householders must self-protect; martial law may be imposed and travel restricted.
Unemployment is endemic. In a desperate attempt to pay their bills the government sells public services to international speculators at bargain basement rates; sackings follow. The middle classes, who have never known want, are reduced to begging or carrying out the most menial tasks to eke out a living............. “
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Our complex near La Mairena (Elviria) also has no street lights as the underground cables were stolen for the 2nd time and the town of Ojén says they are not responsible to replace them even though we are legally part of Ojén. And the insurance companies say they will not insure electric cables because they are often stolen. The complex doesn't have the €50,000 to replace them so we too live on this hilltop in the dark at night.
But more importantly, as you pointed out, what is going to happen to those poor families who have no income? How can they manage? We are all badly affected but they are in a tragic situation.
This is a lesson that never seems to be learned: divest, never put your eggs in one basket. In Spain's case, the basket was sunshine and construction. In Italy much of the economy was based on the production, sale and export of wearable goods - clothes, leather goods, etc. The unions make them unable to compete with other producer countries and everyone saw their life style decline long ago.
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We were one of those families with no income. My husband lost his job in 2009, then at the end of 2009 my boss started to have financial problems and chose not to pay me, although I still had to work. We were living on just 600€ a month, burning through our savings to make ends meet. I lost my job in the new year, his Paro stopped in June and we were back to living on nothing by November. I'd worked for my company for 2 years, he'd worked for his for 6. Trying to live on credit cards is hard. Especially when you have no way of paying them back, but you've got to eat. By June 2011 our situation was dire so we chose to move to the UK to look for work. My husband isn't British. He speaks over 6 languages and is university educated... as am I, but there was just no work. Trying to feed two kids was impossible. Our electric got cut off, our boiler broke down. We used to take them to the municiple swimming pool just for a hot shower and reduced ourselves to trash diving just to get things like clothes and shoes. It was the lowest we've ever been at. Eventually we were evicted for not paying our mortgage. There was nothing to pay with.
We weren't the only ones either. We knew of several other families in similar situations, they were relying on hand outs from family to eat and pay their bills. I had no family and DH's family weren't any more financially better off than we were. We feared for Spain too. We didn't want to leave. My husband had spent his entire life there. But as more and more of our friends were choosing to leave, so did we.
Despite what people say, England isn't that bad. People complain a lot but we know that at least, if we both loose our jobs again we won't face starving kids or our electricity being cut off or have to rummage through bins just to get clothes. At least not for the forseeable future. The weather might be crap,.. and things might be expensive, but at least we have hot water and a roof over our head and clean clothes on our backs.
My husband was looking for a job in Spain for 2 years... and never had a single offer. He came to the UK and found something in 3 weeks, earning more money than he has ever seen in his life for a job that was lower than his previous one.
Spain is a wonderful country and we wish we could have stayed. The people are generous and kind, we had many wonderful friends and experiences, but when it comes down to trying to survive, the Spanish government really just doesn't care that much.
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This thread is about the negitave in our economy.
All this is very true of how it will/does affect people.
But in every loss there is a potential for a gain.
I think I will put away my tin hat and investigate the opportunities.
All ideas welcome !
Have a great day.
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If lucky, there is another day.
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Well Mervyn King announced on Thursday that the euro is set to collapse, and for banks here to "brace" themselves and basically it looks all set to go tits up!
I agree with Mike 100% - this has been coming a long long time. Look at history in Germany in the 30's when people had barrows full of money and couldn't buy a loaf of bread. This is what happens the quantity of easing is done to try and reinflate business.
Its a mess for sure and one that will only hit rock bottom we before surface again.
I was so sad to read the plight of that family who were literally starving in Spain, as you say the UK isnt that bad but watch out!
G
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If I shine too brightly, then put your sunglasses on oy vey
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For those uncertain of how world economics works and affects us all hopefully the following will cheer you up;
The Irish Bailout.........
It is a slow day in a damp little Irish town, the rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German (no offence intended) tourist is driving through the town he stops at the local hotel and lays a !00e note on the desk, telling the hotel owner that he wants to inspect the rooms upstairs in order to pick one ot spend the night.
Thw onwer gives him some room keys and as soon as the visitor has headed for the lift the hotleir grabs the 100e note and runs next door to pay his debt to the butcher, the buthcher takes the 100e note and runs down the street to repay his debt to the pig farmer, the pig farmer takes the 100e note and heads off to pay his bill at the supplier of feed and fuel, the guy at the farmers co-operative takes the 100e note and runs to pay his drinks bill at the pub, the publican slips the money along to the local prostitute drinking at the bar , whio has been facing hard times and has had to offer him "services" on credit, the prostitute then rushes ot the hotel and pays of her room bill of 100e, the hotelier then places the 100e note back on the counter, when the potential guest comes back downstairs he states "the rooms are not satisfactory" picks up his 100e note and leaves.
Result: No one produced anything
No one earned any money
However the whole town is now out of debt and full of optimism!!!!!!
In reality it is not far from the truth, Uk has just bailed out Portugal to the tune of £4b however never had £4b spare!
Bank of England have recently produced more actual cash and have givnen it to banks to stimulate the economy however as banks refuse to lend this was a complete waste of time.
As someone who has hjd his own ifs business in the UK for over 23 years -yes in my opinion it is going to get worse before it gets beeter in probably 3-4 years time, rseal rates of inflation are circa 5.3% th eonly way to curb this is to increase interest rates however the Uk is so far on its backside and so many have become very comfortable with paying a pittance tomwards their mortgage each month that if interest rates did rise it would lead to mass repossessions, also whilst there is a coalition government none of them wish to risk votes by alienating voters with unlikeable measures.
The key business today for most is finding out how they can decrease their outgoings in a coutnry that is taxing all to death. The knock on effect has obviously reached Spain and certainly those who have holiday homes have been hit hard myself included, the costs of travel have not come down in line with others prices etc.
For those with cash yes a great itme to increase it for those without yes a struggle, however who has it right? The amount of peopel coming to the UK just to receive benefits etc cannot go on for ever, Spanish banks are in a lot better position than British abnsk despite their recent downgrading.
Buckle up and backs to the wall me thinks!
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Nobody plans to fail, many fail to plan, sadly the result is the same.
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Hi advisor, i was smiling at the beginning of your blog, as you reference Ireland. My husband and i moved to Eire 1997, bought land and built a gorgeous house by the lake. I am Irish and hubby a Brit. Even back then he had to head to Europe to work in IT. Before we left everyone was raving about the celtic tiger and how IT was booming, yeh in the factorires where they produced parts, as these owners got tax breaks. We stayed 7 years and saw the writing on the wall, the tiger had fallen aslep and then died! We managed to sell our house at a whopping €140,000 loss, gave it away in 2004 and returned to UK. I had never visited a doctor in Ireland as I didn't trust them, so when we returned i went to my doctor with hayfever I had had for a number of years, after all I had been living in one of the greenest places on the planet. Long story short, cancer! Cancer of the nasal septem at base of brain whoa!!!!!! Had excellent treatment at the Royal Marsden hospital,m gruelling but successful and today I am cured. yaaaaaaaaaaaaaaaaaaaaaaaay.
Now we sit in our comfortable home in Surrey, a rented home and we are happy together. But, and there is always a but with me lol. I hanker to have a new experience. We did visit Spain last year and managed to stay for 4 months, stayed on a complex in Vera and disliked it so we cut holiday short by 2 months. We booked a 3 bed duplex and long story short, owner ripped us off and we had to vacate as terrace wasn't south facing as I had stipulated in numerous emails. I needed the sun as this helps with my nose problems due to surgery, rads and chemo. So a nice couple on the complex found us a 2 bed apartment with 2 terraces which received sun all day long. We didnt like complex experience though so came home. We are now in the throws of arranging to come and stay out at Huercal Overa at a friends place. I wonder if we could live in Spain for a year or so, and this is why we are visiting again. I know its all going tits up, but with my private pension and part time online work I do we could manage nicely financially. And perhaps I could at long last I could get around to continuing writing my book, that has sadly been neglected here with all the distractions. So we shall come and investigate in February. I like Spain but my partner isn't sure, so we will see. My reason for thinking of coming to Spain to live is to be as off grid as we can, ie we rent a nice Cortijo/villa and live as anonymous as we can, which is impossible in the UK, someone is always after you for some tax or another lol. And when the euro collapses this country is also going to be badly effected. Call me a romantic, but I can see myself by a pool out in the middle of nowhere sipping my tea and loving it. Hubby can do bike tours or something. He's a keen biker and actually does enjoy driving around on his bike in the desert.
I will keep you posted as to what we decide to do.
Anyway advisor thank you for that entertaining yet realiastic analagy of the shape of things to come, maybe!
Foxilady
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If I shine too brightly, then put your sunglasses on oy vey
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Foxilady
firstly and most importantly I am glad to hear that you have now received the "all clear" long may it last.
It is perfectly feasible to rent at a very reasonable rate in my opinion aplace for six -12 months to let you have enough time for a "true feel" of the area and the country, the hardest call is probably deciding which area to go to.
Wishing you luck if you need any more detial please pm me as I cannot curently find enough time to read eos as I used to (working 5 times as hard to standstill!!!)
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Nobody plans to fail, many fail to plan, sadly the result is the same.
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Well all that has cheered me up on end !! - thanks Justine... tomorrow try getting out of the other side of the bed or stay there until the spring when hopefully the fallout will have subsided!!
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latest this morning.from moneyshow.com-france a.a.a.rating is doomed. after banks collapse.they could not get a loan from china,
next news on this- look up crash 2.on your compter shunned by beijing .bnp paribas ask sarkozy to intervene .rushes to the middle east for a loan,if this carries on,germany will have to think again.dont shoot the messenger it is all on your internet
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Hello,
Firstly, let me wish you all well. It's Bill in Spain here. When Spain simply ignores its problems such as our property theft in Tarragona it simply is going to pay the price.
We have, for the 3 years since our case entered Brussels, advised strongly to everyone we know not to consider Spain for investment, our case alone runs into Billions, one client of ours was planning a 10 billion spend over 8 years.
The arrogance of the Tarragona courts and their protection of their friends effects everyone.
Spain's recovery will be long and hard and they only have themselves to blame, they forget that we brought investment to Spain when they stole the goods. When our case is sorted and our loss is recovered 6 years up to now, does anyone think that people like me are going to make Tarragona or Spain their number 1 destination, for any one that needs to work it out its a giant NO.
We love Spain and the people of Spain, but believe that the UK should leave the EU and keep millitary options to support it's citizens abroard when neccessary.
All the best and have a good christmas.
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People have been living beyond their means through the overuse of natural resources and financial credit as world experts have been telling us for years. Leading enviromentalist Jonathan Porritt talks about the World economy facing the 'perfect storm' but he and others see this as a unique opportunity for politicians to simultaneously tackle both the economic and environmental crisis the world faces - "The shock to the system from the near collapse of our global banking industry has been traumatic - and its going to get a lot worse before it gets better. Even so, that is nothing compared to the near-imminent collapse of the ecological systems on which we depend - particularly a stable climate."
Sadly I think Jonathon's words like the words of warning of other ecologists and economists are falling on the deaf ears of those who do understand the implications of unchecked human greed and the those who are less informed or who have little understanding of the actual gravity of these matters.
We are all in this together, whether you count your home in Spain, Dubai, United Kingdom, Australia or anywhere else in the world. I have lived in Murcia,Spain for the past five years, Germany and Holland for nearly ten years and the United Kingdom for more years than I care to remember and yes there are many endearing reasons that one could quote in the favour of Spain and all of the other countries quoted above but each will have its faults with the threads of greed interwoven into many those faults.
Faults such the corrupt practices that have taken place and continue to be discovered in the political and judicial system in a country where regional differences cannot be overcome to produce a unified Spain. What chance, a unified Europe - I don't think so. Environmentally, well, where does one start? Using my locality as an example, there is the rape of the land in Spain through the intensive farming, overuse of legal and illegal pesticides, criminal treatment of livestock (particularly pigs) and nitrate pollution of the water table (two of the main causes being pesticides and the illegal disposal of animal effluance on land including, some of which is used for the spraying of food crops - the food we eat!) and of course there has and no doubt still is the corrupt practices that have been outed over the recent years.
With three of my children having lived and worked in Dubai, Abu Dhabi, Al Ain and Sharjah for the past nine years, two of whom are currently there and one of whom is now married to a Palestian and the other who is working as the only western female in the Emiratisation programme, I have had a reasonably good insight into life in the Emirates and believe me, all is not well there. It is a land with an attrocious human rights record, where grown (not arab or western) men up to the age of sixty are often still referred to as 'boy' (e.g. office boy, house boy), barbaric punishments are meted out to those who innocent or guilty, fall foul of the law and individuals are slotted into jobs based on their nationality which sadly seems to define their overall social status while in the Emirates. Sure, there are many advantages attached to living in the Emirates, big salaries, big cars fuelled by cheap fuel, cheap labour to do the domestic chores around your villa or apartment in the form of maids and house boys and much, much, more.
The United Kingdom, the irony being that it generally is not that united, is suffering heavily under the burdon of the benefit culture which is in a nutshell, 'the welfare of many supported by the work of few' or so it would seem. Overwhelmed by legal and illegal immigrants, European workers who become entitled to benefits they have never subscribed to the minute they set foot this side of the channel, the countries budgets have little left to address what is sadly a sign of the times, where increasing numbers of young people are leaving school illiterate, alcoholic/drug dependent and whose knowledge is limited to what benefits they are entitled to and how they go about accessing them. Then we have had and still have the expenses scandal, the bonus scandals and more scandals than I care to think about but more worrying is the disappearing family values that were once the strong core of society itself.
The above are just some examples and there is so much more to concern each of us but the question is - Where do we go from here? Are we in the perfect storm?
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