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I have read these postings with interest, it appears that in a "troubled" economy cash is king...but only if you stick it under your matress?
I think the recent HBOS has jittered lots of people and the thought going through my mind is that you want to stick your money somewhere then you have to go to the biggest and highest rated institution in an attempt to keep your money safe. Though in todays climate is even that a sure thing
For one thing I have a job, which pays my rent in spain etc, but I won't be spending my savings and will be making sure that I don't just go for the best savings rate but the safest place for it.
At the same time I keep explaining to the better half that now is not the time to buy...I believe that there are choppier waters ahead and I believe based on what I now see living in Spain is that the days of the luxury second home in the sun are numbered for a large section of the population in Northern Europe. You only have ot drive around the streets, look in auctioners windows (The ones that haven't closed down) and see the huge number of villas now for sale
Me, I would like to buy a place, in a little bit of the countryside and start to grow veg...keep chickens and do a "Good Life"....as a friend of mine one asked, if it all goes wrong could you catch and skin a rabbit. As it happens he was talking of war time Britain, when this is exactly what people did. Perhaps all the small villages in the moutains have it right...live a simple life and what else do you need
This message was last edited by pknott on 9/20/2008.
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We're off the thread - but skinning a rabbit is easy - we used to get hunter's rabbits and hares as gifts when we lived in the campo. Just cut between the legs (this part always made me cross mine!) and the whole skin comes off like a glove!
One tip....
If you are looking for a bit of land with a house on it, make sure the house is legal and check that the land is "regadio" and that there is a permanent, continuous water supply for irrigation.
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Max Kite
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Putting your cash under the matress would be fine if inflation wasn't running so high. The danger at the moment is, when you retrieve your cash, it could be worth nothing. Maybe TJ was right all along (where is he? Did we upset him?) and gold is the best bet. So, buy a little plot of land in the campo, dig a hole, put your gold bars in it, and sit on it.
Which bank is safest? Who'd have thought HBOS would get into trouble? Well, looking back through my e-mails, I found this from as long ago as March, from Money Week:
......another way to gauge the risk of your bank account it is to look at the credit default swap market. Credit default swap (CDS) spreads measure the premium to the risk-free interest rate that a bank can expect to pay in the market for 5-year loans. The higher the CDS for any given bank, the riskier the market thinks that particular bank’s debt is.
So what is the market telling us now? Riskiest of all the major banks is HBOS, with a senior 5-year debt premium of 236 basis points (2.36% above the 5-year gilt yield of 3.8%, i.e. 6.2%). 6.2% is therefore what they have to pay the market for funds. (If they’re paying you much less that’s not a good risk/reward). RBS, Santander (Abbey National) and Barclays aren’t much better but HSBC and Lloyds are considered by the market to be the safest. If you can get a good rate from either of these banks, then given the risks the market thinks you’re taking, that’s a good deal and you should be able to sleep well at night.
Seems like the experts actually do know what they're talking about sometimes!
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Mark Twain
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Do they still sell Krugerrands? - not that I could afford one!
HSBC - know what it stands for?
H - Hong Kong
S - Shanghai
B - Banking
C - Corporation
Makes you think, doesn't it? - well, doesn't it?
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Max Kite
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Hi Pknott,
Talking of hard times, the older Spanish know all about that - people I know who lived through the Civil War ate their own dogs. How, I don't know, as they had no teeth.
The youth today - they can't even live without their "motos".
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Max Kite
Maximeters S.L.U.
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Hi all homeowners,
Stumbled over this in the news (from 17th Sept)......
While not expecting a "huge impact" from the crisis, Luxembourg Finance Minister Jean-Claude Juncker said: "I don't think the events we are witnessing are helpful for the general growth situation, given the fact that confidence is lacking."
"I'm trying not to give reason for panic," said Juncker, who speaks on behalf of eurozone finance ministers as chairman of their regular meetings.
Economist Howard Archer at consultants Global Insight warned that the financial crisis "counters the recent positive developments for the region of sharply lower oil prices and the euro's retreat from its July peak levels".
He warned that the financial sector crisis "will weigh down significantly on already very fragile business and consumer confidence."
"It is also likely to deepen and extend the credit crunch, thereby making borrowing more difficult and costly for businesses and consumers," he added.
"This will also adversely affect housing markets, intensifying the problems in countries such as Spain and Ireland, also the UK outside the eurozone."
With turmoil in the financial sector, banks have reined in lending to each other, which in turn has made it more difficult for businesses and consumers to get credit.
Global central banks pumped billions of dollars and euros into the financial system earlier this week in a bid to keep the credit crunch from getting worse.
So - the banks are trying to pull themselves up by their bootlaces. But surely, governments and banks pumping money into failing institutions is the perfect recipe for inflation, no?
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Max Kite
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Hi Maria,
Thankyou for that but I am afraid that I don't understand a word!!! I have the image of lots of little men on the floor of the London Stock Exchange wearing top hats and nothing else!  Is that what is meant by naked short selling?
Seriously thoug - would you be so kind as to put a few words of explanation for us financial dumbos? 
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Max Kite
Maximeters S.L.U.
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Financial crisis in personal terms
Let us try to explain the current financial crisis in personal terms:
Suppose you are an average citizen of a first world country, i.e. USA, U.K... The last past few years you have experienced that the prices on properties have grown inmensely, and... suddenly you realize that instead of having your money in your bank or in the stock market, it probably would be wiser to buy a piece of property. But how can you afford to buy a property if you have little money or no money at all? So... you say to yourself: "Well I'm going to ask the bank to lend me some money and I will guarantee it with the same property I'm buying, because, anyway, it will cost a lot more in the next future than what I'm paying for it right now".
You go to your bank, and they study your case and tell you.
Bank: "Well Mr. X, I can see that you have these incomes and those debts and so on and so forth, and given that you are not really in a position to borrow any money, I have no other choice but to deny this loan".
You: But,... you said to yourself .... "oh my... I´m loosing this great opportunity, some bank or financial institution will probably accept my deal If I accept a higher interest rate (a subprime mortgages perhaps!!), beacuse of course, and honestly speaking, the bank is taking some risk on me".
So one day, early in the morning you go to one of those Magic banks willing to lend you money for a higher interest rate, "because you can not afford to pay any mortgage or loan, but .... given that you are buying this beautiful property in DreamLand and it is going to be worth a lot more money in the future, if you do not pay them (the bank), they will anyway keep the property and sell it for a higher price"
So this fantastic guy in the Magic Bank tell you:
MagicBank: "Ok, Mr. X here is the money and here is your mortgage document... please sign here".
You sign and go home happy becuse you are about to make some interesting money and, who knows, perhaps you could sell this property in the future for a lot more money and get that beautiful house of your dreams for you an your family. Oh, guess what!!??, your neighbors Mr. and Mrs Y also got their loan even though he is currently unemployed!!!!.
Days when on, but as they passed the Real Estate bubble bursted ... and.... property prices, not only stoped raising, but started to drop away. Suddenly you found yourself trapped in this nightmare, having to pay for an amount of money that you know you can not afford, because of interest rising and because your company, the promissing building company you thought was going better and better last year, is not really going well anymore. In fact, you still have in mind the day you had to fire your secretary Elizabeth. Oh my, what are you going to do? .... well in your case is not so bad anyway ... the bank will keep the beautiful house and that's it. But Mr. and Mrs Y, gave their own house as guarantee to the bank; he is still unemployed and she, last time you heard, was about to lose hers. Oh my ... your neighbors just lost their house!!
But that Magic bank that gave you the money you needed, is in real troubles now. It has those mortgage papers it can not collect and own these properties that are worth less than before.The Bank says Oh my!! we are losing money and it does not look that it is going to improve.
John, that magic bank clerk that authorised your subprime mortgage, heard that although the bank was facing some problems things were not really bad because some other bank decided to get some mortgage packages at a real good price, and with that money they were going to cut their loses. Not only that but also some other even more "inteligent banks" sold those debts to their clients, at a very attractive price they could not even refuse, thinking in all the money they were going to make out of pennies. Besides, these clients thought, the bomds are supported and backed up by these famous banks in the US and some other around the world.
The thing is that now, hardly any body would be able to recover his/her money if goverments do not intervene by granting some money that will support this situation and avoid a total collapse of some banking and financial institutions.
Oh and guess what!! you and I and Mrs. Y have our savings deposited in some of these institutions but .... oh my.... they have lost so much money that .... I do not even want to think about, because goverments around the world and some healthy financial companies in the UK, Japan, South Korea are taking over these financial institution for a real bargain price.
As we say in Spain "A río revuelto, ganancia de pescadores", that is to say "in troubled waters, fishermen gain". I´m sorry for you Mr. X and even more sorry for the Y's but that's how it goes.... the economy was claiming for it's own balance, the real value of things, and human greed needed a call of attention.
So far so good, now goverments realize how difficult things currently are, and after sometime they have remembered that some laws were supposed to be applied, not to mention that some survaillance was needed .... but who really cared about some time ago if everything was going Honky Dory!!
That is why the Spanish authorities as well as some others around the world are now telling the public that they are now taking measures!!!!
By Steven Schaffer. Economist and MBA. Member of Costaluzlawyers team.
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Maria L. de Castro, JD, MA
Lawyer
Director www.costaluzlawyers.es
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Thankyou Maria and Steven. That has brought it to a personal level and I for one am far better informed than before.
Last question - which was the first on this thread, I think - what will happen if (in spite of governments intervening (with OUR MONEY!  )) the home owners - Mr A,B,C,D....X,Y AND Z default on their mortgages as well as Señores y Señoras A - Z and the banking system in its entirety becomes insolvent? What will happen then?
I live inland, and see something slightly different to the inhabitants of the tourist areas (i.e. everywhere from the Portuguese to the French borders). For example, it was only recently that the locals started to use banks - they really did keep their pesetas, gold, jewellery etc. under the mattress or in a hole in the floor of the cortijo under a tile.
I think that the inland Spanish are going to lose faith in the banking system and want their money back. Anyone seen Mary Poppins? - Let's go fly a kite.
Are we looking at the total disintegration of western civilization?
Come on Steven - what's the worst case scenario?
This message was last edited by Max Kite on 9/23/2008.
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Max Kite
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Isn't this the same thing that happened in the late 1980's. My husband was encouraged to buy a house as he couldn't loose and would make loads of money when he sold it. Before a year was up the market had fallen and interest rates started to rise dramatically reaching 15%. People were walking away from their houses in droves, handing the keys into the Banks.
The same happened in Spain, when I was looking at buying in Spain I found a report talking about how properties halved around the same time, perhaps because all the foreign owners were selling up because they could no longer fund two properties.
Banks survied then, interest rates rose and I think savers where getting 12%. As long as you don't exceed the amount that is guaranteed your money will be safe.
The only Banks which did go under ,BCCI and others, were attracting investors by offering interest rates which couldn't be sustained. People invested in droves and most exceeded the guaranteed limit which at the time was £20k. They were only guanteed to get back 75% of that £15k, the rest was given back in percentages once the receivers were able to release more funds. Last I heard all creditors had received their funds in full.
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The savings limit guaranteed in the UK is now £35,000, but in Spain is just €20,000. See this thread And we're not getting even half that much interest, yet. In fact, rates are more likely to fall, surely?
Max, nice image of streakers in bowler hats on the trading floor! I think instead of naked, you should read blatant. At least, I think I've interpreted that correctly. This is basically the same bit of emergency legislation that was introduced by the UK and US and most other Western economies last week, to prevent traders with enough clout manipulating the market and causing another HBOS by short-selling shares in financial companies. That is, effectively, placing bets on the share price falling. From what I can figure out, if enough people bet on a company's shares falling, the market starts to believe something must be wrong with that company - and as a result, the share price actually does fall as confidence ebbs - and the shorters make a packet while everyone else suffers the consequences.
I hope my amateurish explanation helps!
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"Get your facts first, then you can distort them as you please"
Mark Twain
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Hi Semi,
I remember the 80's recession as well. But I think this is different. Reasons:
1. We have far less opportunity to manufacture or service our way out of debt as there is so much less industry in the west.
2. We have been living in a huge bubble of inflated prices
3. China is so fiscally powerful that we are just the dwarves at its feet.
4. The "City" and other western trading institutions have been shown to be puffed up hollow cons. Once London and the west lose their income from the financial markets, we will have little to fall back on.
However, I may be wrong
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Roberto,
You've put it in a nutshell (and we must all be NUTS!).
Where's my machine gun - you are going to have a really p$$$ed off captalist on the loose soon. How dare they gamble on a system that I believe in (with some reservations!).
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Hi all
Just spotted this in the yahoo news section. The figures, to me at least, are staggering........
UNITED NATIONS (Reuters) - U.S. President George W. Bush and other world leaders scrambled on Tuesday to contain the fallout from a financial crisis engulfing Wall Street and sending shock waves across the globe.
In his farewell speech to the United Nations, Bush offered assurances of his commitment to stabilizing world markets, which are overshadowing international concerns about standoffs with Russia, Iran and North Korea.
But he also faced criticism at the annual General Assembly gathering of world leaders over the excesses of global capitalism that Washington has long pushed as the path to economic prosperity.
"Who is responsible for this disaster? May those who are responsible be punished and held accountable," said French President Nicolas Sarkozy.
Sarkozy called for a summit of world leaders in November to examine ways to overhaul what he said was a "crazy" financial setup at the root of the problem.
Even Iranian President Mahmoud Ahmadinejad -- whose country faced condemnation from Bush over its nuclear ambitions -- joined the fray, saying in a newspaper interview the Wall Street crisis stemmed in part from U.S. military interventions in places like Iraq.
"American empire in the world is reaching the end of its road, and its next rulers must limit their interference to their own borders," Ahmadinejad said as he railed against Iran's foes, the United States and its ally Israel, in his U.N. address.
With Bush leaving office in four months, many world leaders are looking to the November 4 U.S. election and the next president -- Republican John McCain or Democrat Barack Obama.
As the speechifying continued just miles (kms) from Wall Street, intensive efforts were under way in Washington to craft a $700 billion (377 billion pound) bailout spurred by the worst upheaval in the U.S. financial system since the Great Depression. (that's $2,700 for every U.S. citizen!) - Max.
"I can assure you that my administration and our Congress are working together to quickly pass legislation approving this strategy, and I'm confident we will act in the urgent time frame required," Bush said.
'MAGIC' OF MARKETS QUESTIONED
In his speech, Sarkozy urged the creation of "a regulated capitalism in which whole swathes of financial activity are not left to the sole judgement of market operators."
With investors worried and the meltdown spreading, other economic powers are feeling the pinch. Poor countries fear cuts in the aid budgets of their biggest donors.
U.N. Secretary-General Ban Ki-moon said financial turmoil demands a new approach with less "uncritical faith in the 'magic' of markets."
His words resonated with delegates of leftist governments that have long opposed the free market orthodoxy the Bush administration has advocated.
The main thrust of Bush's eighth and final U.N. address was a call to redouble the fight against terrorism -- a choice criticized by Brazilian President Luiz Inacio Lula da Silva.
"He opted to talk again about terrorism," said Lula, a former labour leader friendly to Washington. "I was expecting he was going to talk about the economic crisis because I think this is the most important thing at this moment."
Invoking the pain felt in the developing world, Philippine President Gloria Macapagal Arroyo said, "Economic uncertainty has moved like a tsunami around the globe, wiping away gains." etc...etc...
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Max Kite
Maximeters S.L.U.
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Correction to my previous post - naked short selling is the practice of selling a stock short, without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale. Perhaps aggressive, rather than blatant, would have been a better description. Learning all the time.......and getting more and more worried.
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"Get your facts first, then you can distort them as you please"
Mark Twain
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Hi Roberto,
Sorry - I must be REALLY thick!  Apart from Bermudas, what is a short sale?
And if you are selling, why do you need to borrow? .
Sorry - you'll have to explain a little more thoroughly. I don't understand.
Signed
Alistair Darling
(Only joking - he couldn't even string a sentence together).
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Max Kite
Maximeters S.L.U.
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Short selling means borrowing shares (for example from fund managers) for a fee, and selling them on the open market, with the intention of buying them back at a lower price later on and returning them to their owner, pocketing the difference between selling and buying price. Most funds hold shares for the long term, so aren't particularly interested in short term price movements, and by lending the shares out in this way and charging a fee, it's a nice way to earn a little more from them. If short sellers guess correctly that a share price is going to fall, they can make a fortune. (If they get it wrong, they lose a fortune, and possibly more). It's a trading technique that means you can make money whether markets are rising or falling.
Naked short selling, it seems, means selling shares you don't own and haven't even borrowed. Don't ask me how that works, I haven't a clue!
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"Get your facts first, then you can distort them as you please"
Mark Twain
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Hi Roberto
Once again, Wikipedia comes to the rescue....
http://en.wikipedia.org/wiki/Naked_short_selling
Sounds terrifying to me! Sounds like buying a house that hasn't been built yet - er....except people do that though, don't they 
Did anyone see the Yes Prime Minister when Sir Desmond Glazebrook's bank was about to fold? Too close to the truth for comfort.
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Max Kite
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Yep, not dissimilar to buying off-plan I suppose. Except, when you buy off-plan you know in advance how much you could lose if your prediction on future prices is wrong. i.e. if house prices go down instead of up and you find you can't sell before completion ( & can't afford to complete), then you stand to lose your deposit.
But imagine if you borrowed someone's house and sold it, expecting prices to drop, so that you could then buy it back cheaper and return it to it's original owner - but prices go up instead, so that you have to buy it back at a higher price in order to return it to it's owner. Whoops! And theoretically there's no limit to how much prices can go up, so whilst with the first example of buying off-plan you know how much you'll lose if you called it wrong, with the second scenario, there's also no limit to how much your loss could be. Which is why short selling is best left to the experts and people with stronger nerves than mine!
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"Get your facts first, then you can distort them as you please"
Mark Twain
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