The coming worldwide credit crunch

 http://www.dailymail.co.uk/news/article-1365931/Give-vote-future-Europe-Cross-party-campaign-launched-secure-historic-referendum.html

Cost to the UK to be bullied by unelected EU eurocrats

8 billion pounds - enough for 275,000 nurses or other vital jobs!!!

Now my head is spinning. A poll showing how many people would like a vote on whether or not we should have a vote?

On the matter of whether (or when) Spain might revert to the peseta:

 Roberto

Actually let your head or your pets head spin no more. From the DT last year.

"Mr Cameron gave voters an “cast-iron” promise in 2007 that a Conservative government would hold a popular vote on Lisbon.

As certain as night follows day Portugal collapses. Now what to do - I know lets pour more good money after bad. After all what does a country need that suffers from too much debt, but more debt. Thats bound to sort it!

 Following the resignation of Prime Minister José Sócrates, after a series of austerity measures were voted down by Parliament, Portugal is now without a permanent government. Due to constitutional rules an election is not expected until the end of May.

·         In 2011, the country needs to refinance 25% of its national wealth – in relative terms, this is even more than Greece. The country’s borrowing cost has been above 7% for 38 consecutive days. Greece and Ireland lasted 13 and 15 days respectively at these kinds of rates before asking for a bail-out. 

·         We estimate that a bail-out package for Portugal would need to be between €60 and €70 billion. This should allow Portugal to cover all bond repayments as well as any government deficits for three years.

·         However, a bail-out is unlikely to solve any of Portugal’s fundamental problems. Both Ireland and Greece are already looking to renegotiate their bail-out terms. This illustrates that short term loans are simply not sufficient.

·         Portugal’s cost competitiveness relative to Germany has decreased by 21% since the introduction of the euro. An increase in ECB interest rates, which is widely expected next month, will also lead to a decrease in the availability of credit and domestic demand in Portugal. This could cause Portuguese GDP – already estimated to shrink by 1.4% in 2011– to contract further.

·         Although we expect a bail-out, we believe a more viable solution would be to restructure some of Portugal’s debt. In the long run this may prove cheaper despite a larger initial cost, since, unlike in the case of a bail-out, it would cut Portugal’s debt rather than increase it. It would also reduce the burden on taxpayers, instead transferring more of it to investors. Crucially, the longer Portugal waits, the costlier a restructuring will be for the country, since its debt is expected to continue to build up over the next three years.

·         In order for a restructuring not to spread contagion to Spain, it would be best to combine it with a limited bail-out, which would involve smaller contributions from member states, since more of the cost is borne by investors.

·         The hope is that Portugal will use the cash and breathing space, freed up through a restructuring, to invest wisely in its own economy, including pushing through more economic reforms. However, the country will still be stuck with an over-valued currency, and the unanswered question of whether it can ever become competitive as long as it shares a currency with radically stronger economies such as Germany.

 TJ222 many thanks for all your educational updates.

What is your prediction for the immediate future value of euro currency against the pound sterling? Is it best to hold onto euro currency for a while or is it best to exchange back into sterling until these insecurities are resolved?

TOP man TJ222.

Knew you couldn't stay away too long when Socrates threw the towel in.

What's your comments on the MEP Den Dover  who has been ordered to pay back £345,000?

You're the political and finance guru on here, please, give me the inside track on how I can get one of those MEP jobs.

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I really have no idea where the EUR/BGP is going in the immediate future or long term. What I do know is that both are rapidly loseing purchasing power against hard assets, particularly oil and precious metals. In the short term it looks like the EUR/GBP is stuck in a range between 82 and 89. Despite the known and unkown skeletons in the cupboard, the eur is strengthening against the USD which is the real worry and is the pair to keep an eye on. Given the dreadful state of the EUR it makes you wonder just how much trouble the USD is in. A clue might be in the fact that just one state in the US is equivalent to Portugal in GDP and they are all bust. The sunshine state is alone the 7th biggest economy in the world, and they are well past bankrupt.

With regards the GBP it was announced that not just inflation is higer than forecast at a shattering 5%, but that the budget deficit was getting BIGGER. In other words despite all the song and dance about the swingeing cuts and all the gnashing of teeth, it still apppears that the UK is going BACKWARDS. Apparenty one BOE member voted to hold rates and add 50Bn more QE. That just shows you how confident they are in this imaginary recovery.

In summary all paper currencies are in the process of being diluted to worthlessness, its just a question of which one will get there first. 

Kenny - Re the MEP job I have no idea, do you think with my views I am in with a shot? I think Portugal and Greece will pay back their debts and become paragons of fiscal discipline first.

Sure TJ

You easily qualify for one of the MEP posts.

You can sit next to Nigel Farage! He can be the Sub and you can feed him the torpedoes!

 From the most famous and successful investor in the world

http://news.yahoo.com/s/nm/20110324/bs_nm/us_buffett_euro

Dear All,

is it not true that many anonomous fund managers regularly outperform him, year on year?

Regards

Norman

Norman

Warren Buffett has performed an average of 20% per annum over the last 40 years he is a company director not a fund manager

Category A shares in Berkshire Hathaway peaked at just over 100000 us dollars i seem to remember a few years ago

He is I think over 80 yrs old now, one of his most recent purchases which i invested into as well was BYD a chinese car company i am down 50% on what i invested but it should come back over time.

Regards Rod

I doubt there's many (if any at all) that have beaten Buffet's long term average annual return of 21.5%.  He has managed this over a period of 40+ years.

Peter Lynch managed a 29.2% average annual return, but that was only over a 13 year period.

Thanks All,

What do you think of buy to let in Spain now, given that you need no deposit and prices are so low that even the lower income renters can cover low interest mortgages?

Assuming of course that you are taking up banks repo' stocks with their mortgages.

Regards

Norman

Hi Norman,

I would say it's far too risky to invest in Buy to Let in Spain.

The market is at best stagnant and may well drift down further. Also, it's difficult to find quality Long Term Renters at Rent levels that would cover all of your overheads and give you a reasonable net return on your investment?

Banks offering 100% Loans are often given against property that they now own and cannot shift.

I looked at a Bank Repossession property recently that was offered with a 100% mortgage priced at €230,000. A cash offer would have bought it for €180,000!!

This thread started by the marvellous TJ222 is now 3/4 years old and many of the pitfalls he and others predicted are still very much with us today and probably will be for some years to come?

Dont forget that you still have the costs to pay on these bank properties which will account for about 12%, also the properties that the banks are offering are massivly overpriced , they are available through other sources at up to 50% less if you are paying cash.

There are plenty of good agents offering these properties and some are offering mortgages as well.

Dear All,

here in the sunny-south-east we have the start of Spring with tulips now following daffodils into flower and some bursts of actual sunshine.

but we still have the absolute misery of colds to deal with, we cough and sneeze through the day and agonise over children and babies puking on green phlegm and being packed off to doctors for yet more antibiotics.

what it is like further North I don't know, but better weather will always be a strong pull.

does that pull in itself create a rental demand?

also with many thousands of Spanish families trapped into unpayable mortgages, surely they need rented accomodation?

do they get rental assistance?

housing benefit around here will pay £650/month  for a modest family house.

Rod, if WB invested with all his expertise in BYD and you joined him whilst the "herd" declined, surely at 50% with nothing else changed, shouldn't you and he be jumping in with both feet?

How are you privy to what he is doing?

Whilst I will never match the loss of life savings I have saved a little and am heartily sick of the interest the banks are offering whilst inflation is about 5%.

Surely investing should not be "evaporation".

Regards

Norman

Norman 

If you visit www.trentriver.eu it will help you to know my position I am not privy to Mr Buffets buys and sells its commonly accesible via certain web portals and research sites my company subscibes too

I personally invested in this company because they are developing battery powered vehicles which in another 20 years may be how we all travel arround when the Oils nearly gone 

ps I am not advising anyone to invest in BYD as it is speculative I just invested what I could afford to completely lose if it went wrong.

Regards Rod

 Norman

I have just this last week returned from my Marbella apartment and had a wonderful time the weather was 26 degrees we visited two new excellent restaurants it was all perfect, found new car hire firm much cheaper and better only needed to paint a bedroom wall which is unusual after renting out on the short term lets.

If i was you i would stay completely away from buying property in Spain unless you have money to waste the cost of living in Spain has rose dramatically over the last 4 years

I do know people who want to sell desperately in our complex but cant and some units are bank owned

But would I buy another NO one holiday home is quite enough 

At your time of life i would just hop on a plane and not have the hassle

Regards Rod

 http://www.businessweek.com/news/2011-04-04/trichet-seen-burying-ailing-nations-with-interest-rate-rise.html

When does a serving PM not seeks re election? Answer when your Zapatero and EVEN you can see what is coming.

Trichet meanwhile has an impossible job on his hands. Inflation is showing up everywhere in the euro zone and to maintain even a shred of credibility he MUST raise rates. Germany is growing too quickly and rates are not just low, but emergency low.

However the peripheral nations are on their knees, addicted to cheap credit, with a population staggering under debt loads at CENTURY low rates. What is trully incredible is that people are in so much trouble and the banks insolvent. and interest rates haven't even moved yet. This gives you some idea of how silly the market had got.

If Trichet wants to avoid a currency crisis in euroland he must double base rates and then double them again to get them back to anything like a normal rate. 

You don't have to be an economist to predict what this is going to do to the Spanish property market. Zapatero is probably looking forward to spending more time with his family and getting as far away from this slow motion train wreck as he possibly can.

 So, Portugal has succumbed.  Now asking for a bailout and has joined Greece and Ireland.

Bailout request