Tax cashback, not pass the parcel

So after a week of the governmernt stuffing billions into banks and public bodies stuffing millions into busted banks in Iceland, the Great British Public remains unimpressed, passive and sitting on their collective hands as McBroon & Co’s revival of the Rocky Horror Show heads towards the final curtain.

Folks cannot believe that a Government will hand out taxpayers’ money to mismanaged banks, who will then refuse to lend it back to taxpayers to spend on houses, cars and flatscreen tellies – the sort of buying needed to kickstart the economy.

That’s a kind of “pass the parcel” party game, where the kid grasping the parcel when the music stops gets to keep it. The banks are certainly not letting go even as the music plays on…

Stop the game and solve the problem right now. If McBroon were to order the banks to transfer £6,000 into everybody’s bank account at a reasonable rate of interest, people would rush out and buy something at Argus, John Lewis or Dagenham Motors. Others might add the cashback to their kitty for a new house or, whisper it, buy a few shares for a rainy day.

Some Brits might spend some of their cashback at Iceland or Hamleys, as both are apparently owned by companies in busted Iceland – on condition that country hands back the millions of UK council tax funds lock-up in the country’s frozen bank accounts.

If the British banks can’t get their act together, the sensible general public should be given the chance of spending their own money, stealthed away from them over years by McBroon.

That would free up the economy in time for a bonanza Christmas.

Then when the money’s spent, we can all head off to Spain where there are now enough affordable bargain homes for everybody tired of the halfwits running Britain and its failed institutions. At least in Spain there are no signs of failing banks because the Bank of Spain kept them under a tight rein and savings are covered by an unlimited Government guarantee…

Distressed in Spain is an opportunity?

A plethora of “distressed” or BMV (below market value) property prospects are being promoted by those real estate agents who are still active in the Spanish market. Should buyers consider this as an opportunity or something to steer well clear of?

The reasons for this stock of properties becoming available are many, varied and entirely plausible. However, the situation is dire with daily increases in number of properties coming onto the distressed market. The quality varies, but the depth of the stock from individual villa properties to entire developments makes for a very dynamic market.

Demonstrating all the attributes of a “buyer’s market” the only thing lacking in Spain currently to support that description is the buyer's' volume of three to ten years ago.

Spain is suffering as a result of various issues that are special to itself. In addition to the “credit crunch” in all its manifestations, Spain’s property market has seen:

• Developers collapsing
  
• Excess supply – as a result of misjudged property expansion
  
• Off plan purchasers being unable or refusing to complete
  
• Screwball valuations
  
• Mortgage defaults
  
• Dodgy Town Hall officials
• High purchase costs.

But then again, looking for a reality check from the world’s financial institutions –  Northern Rock, Lehman Brothers, HBOS, Bradford & Bingley and others  - the world’s stock and commodity markets, the poor performance of UK pensions, the UK base rate, the Euribor and Investment and unit trusts – could we really trust our so called financial professionals to park our car without scratching it! The party has been screwed up by greed and short-sightedness, presided over by McBroon & Co who have taken Britain from the fake "boom" to a nation bust in spirit and wallet... 

It’s high time for us to question those in whom we place our trust. We should be more hands-on in terms of assessing risk for ourselves, seeking out opportunities and seizing those prospects that tick our boxes.

This is not the first time, and we suspect will not be the last, that Spain, or more likely various enterprising property investors, will see the glimmer of a ready profit from the current distress in Spain’s property market. There's a good selection of distressed and Spanish bank repossessions at www.propertyinspain.net

Based on content from www.distressedpropertyhandbook.com a newly published guide which aims to provide investors with clarity as to the bargain prospects that are becoming increasingly available in the Southern Spanish property market.

More praise for Spanish banking

As American, British and German regulators thrash around in useless unison in a last-ditch effort to save the financial world from its foibles, follies and foolish lending, Spanish bank Santander is poised to make more juicy pickings from the corpses of failing banks.

It has gobbled-up Abbey, Alliance & Leicester and Bradford & Bingley to become the second biggest savings player in the UK with 25 million customers and 10% of the market and has hundreds more High Street branches to welcome savers and from which to dispense a few mortgages.

Santander, stronger than most of its European rivals, seems at the top of its game and is poised for more acquisitions. There have been rumours of a takeover bid for Wachovia, America’s biggest savings bank.

Could this be as good as it gets for this Spanish bank? While Santander basks in the glory of positive press (including earlier blogs from ourselves), the world economy is quietly falling apart, thanks to a bursting property bubble, banking mismanagement and lax Governmental regulation.

Santander has become strong because it was forced to stay away from the dodgy off balance sheet dealings that have caused US and UK banks to dive in the resultant credit crunch. As a result of the higher-than-usual provisions needed to comply with Bank of Spain regulation, they took few risks and have a pot of dosh to buy the weak and infirm among rival banks.

All it needs now is for the Bank of Spain to declare they will guarantee all savings in Spanish banks and Santander could become a mighty magnet for savers in Spain, Britain and Latin America. It happened last week when the Irish Government gave a 100% savings guarantee and now followed confusingly by Germany.

It will not be lost on savers that Spain has regulated its banks better than the rest of the world and that includes the pathetic performance of the UK’s McBroon & Co. A choice between calm, ethical banking and chaotic, catch-up banking regimes is a no-brainer for general savers.

For savers wanting to buy a property in Spain, getting a decent mortgage from an Abbey branch near you might be worth checking-out? Local contact, international banking muscle, stronger currency as the euro outperforms sterling, are factors that provide reassurance – a rare commodity in the current economic climate…

Spain beckons as Britain banks on Lord Sleaze

When Governments throw taxpayers' billions into a bubbling toxic economic cauldron in the hope of rectifying their mistakes and then find their elixir provides no respite for their hard-pressed citizens, which way next is an obvious question.

America will have its answer on November 05, the first day of a new president and elected senators who can correct the fiscal fiasco of President Bush. That’s fine for the US, but Britain seems likely to go bust before a solution to 11 years of McBroon mismanagement of the economy can be implemented.

While America is to have a clear-out, Britain is told the financial rescue will be led by The Prince of Darkness, Lord of Sleaze and sworn enemy of the current Custodian of Empty Coffers. Having upset dozens of countries while exiled in Brussels, Peter Mandelson, minces back into Downing Street, £600,000 better off for his cosy Euro Trade Commission’s stint.

He lost the bra wars with China and failed to reform world trade, good credentials for getting McBroon’s Britain back on its feet. An unelected Custodian of the Empty Coffers hires an unelected, discredited financial manipulator so that “Britain can lead the world out of the credit crunch,” proclaims the desparate McBroon.

Faced with that unrealistic prospect many Brits will be deciding to take their futures elsewhere and, as always, that sunny, friendly place called Spain beckons.

There are enough Spain-bound planes each day to make the Berlin Airlift pale into insignificance and as removal van men have no work in Britain because nobody’s buying, they will be happy to have a few days along the Med shuttling Brits’ chattels into very affordable modern homes.

Amazing how the sound of gentle waves lapping upon a golden beach can blot out the harsh sounds of Britain hitting rock bottom, how lunchtime can be relaxing and life unhurried, how the strong euro can buy so much more. And occasional checks on life and death back in Blighty can be made reading the Daily Mail or The Sun over morning coffee – both papers have enough readers in Spain to print locally.

Take your chances with McBroon and Lord Sleaze shuffling the deckchairs or relax on your very own lounger round the pool in a country that manages its economy better and with transparency and honesty? 

In praise of banks in Spain

The posting in this blog five days ago that suggested Spanish banks were safe from the financial storms raging around the world raised some eyebrows among the so-called “experts”.

We revealed how the Bank of Spain had successful banned Spanish banks from paddling in sub prime toxic waters and how the banks were currently enjoying what we dubbed a “mañana” moment of relaxation.

Indeed, smart Banco Santander even found time to mop-up a couple of UK bargains in the shape of Alliance & Leicester and Bradford & Bingley who had fallen on hard times due to their forays into the US sub-prime market. Santander now has 25 million customers in the UK and long-time customers of Abbey – an earlier acquisition - enjoy improved customer service due to more branches, more staff and fewer “offshore” call centre confusions. The old Abbey creaking data system has been replaced by Santander’s state of the art IT.

Other media have taken up this UK versus Spain theme and some national newspapers have praised the diversification of Santander with low exposure to property loans but good general business in Spain, Britain and Latin America.

One newspaper, the Financial Times has gone further, calling on central banks to ‘take lessons from Spain’. The British newspaper thinks that the Bank of Spain’s conservative policies have contributed to the fact that the Spanish financial system can now avoid the current storm.

That’s a relief for the many British families and investors still determined to buy a property in the land of sunshine, sandy beaches, sangria – and safe banking.

Spanish homes prices puzzle

House prices in Spain are going UP and DOWN at the same time, which is a puzzle to experts and the buying/selling public at large.

On an annual basis, Spanish house prices fell for the first time in over a decade during the second quarter of 2008 and data pointed to sharper declines once new homes begin to lose value, according to the National Statistics Institute (INE) in its first housing report. Amazingly, the report also found that new homes gained in value over the last quarter.

The decline, compared to a 2.8 percent increase in first quarter prices, was driven by a big fall in the value of existing homes between April and June, the INE reported. Overall, house prices have fallen 0.7 percent in the first six months of 2008, according to the INE survey. However, separate Housing Ministry data shows only 0.3 percent fall in second quarter prices - the first they have recorded since the early 1990s.

Analysts agree the INE index is more realistic than Housing Ministry data, which showed prices rose 2 percent year-on-year in the second quarter. Resale properties are leading the lower prices, down 4.9%. We are all surprised the INE reported new homes gained in value 5.3% in some areas between April and June.

House prices in Spain have fallen by an average three points according to the latest data which comes in the new IPV index which is an index of housing prices in Spain. It shows a fall of 3.1% from the first to second quarter, and for the year so far of 0.7%.

So resale Spanish house prices are declining by 4.9% while new house prices are increasing by 5.3% and there is an overall decline of 0.7%? Compared with the UK housing market the latest Spanish statistics should not generate much cause for concern so far.

In reality, the highest ever Euribor rate of 5.5% is causing an increase in Spanish bank repossessions and as the loan to value ratios tend to be modest by UK standards, the asking prices needed to recover the outstanding loans are very low. Specialists, www.PropertyInSpain.net have bank-owned bargains at 25% to 50% below current valuations and even with legal costs added are good investments for savvy buyers.

Because of the relatively low numbers of Must Sell property, the impact on the national statistics, is minimal, but can be expected to rise as the high interest rates – still lower than those in the UK - affects hard-pressed owners.

Spain looks like being a buyers’ market for some time to come - make hay while the sun shines, as they say…

Spanish enjoy Mañana Moment in financial storm

As America and Britain struggle to solve their banking greed-induced financial woes, Spain’s Government, having dropped a EUR 3 billion life-raft to the property sector, is taking a quiet “mañana” moment - because the country’s banks have zero exposure to US subprime debt…

The Bank of Spain has long banned risky stuff for the banks under its control and their reserves and bad debt provision would have to plunge by 50 percent before they felt any stress. If the current level of loan defaults increases and the world banking paralysis continues, then Spain, like the rest of the western world could be in deep trouble. However, at the moment the country is better placed than Britain or America.

Spain needs foreign cash to service a current account gap of EUR 100 billion, on the same levels as the US and Britain. Much of that is tied up in the one-time property boom that has seen many developers crash, leaving surplus stock to be sold off on the cheap. Spanish banks too, are drip-dripping repossessions into the market as can be seen daily on the www.PropertyInSpain.Net website.

There are bargains to be had in most second home areas of Spain and prices have generally dropped below the benchmark EUR 2,000 a square metre level that means a typical 2-bed, 2-bath apartment with communal pool can be picked up for around EUR 124,000 – well within the £100,000 sterling buying band.

The other big earner for Spain is its world-class tourism industry, which generates huge revenues and maintains millions of jobs. Tourist arrivals this summer have held up well, despite higher flights costs, lower disposable income and the strength of the Euro as northern European and Spanish families insist on their annual breaks on the playa. As many families prefer rental apartments or villas to hotels, the property rental market is also holding up.

So it could be the Spanish Government can continue to take a relaxed mañana moment as less well managed economies continue to battle it out.