This interesting N.Y. Times video explains why the markets cannot afford to let Spain, the world's 12th largest economy, follow the same path as Greece.
Unlike the U.S. housing bubble, which was dominated by creditory subprime lending, in Spain it was more the enthusiasm of buyers from across Europe who were attracted to second-home properties, that fed the real estate boom. As a result of this massive overbuilt sector, banks are now so heavily exposed to real estate, real estate services and construction that almost 40% of all their bad loans are from this sector.
Unfortunately, according to Gretchen Morgenson, Spain
lacks the policy tools to resolve this massive housing crisis because it
is in the Eurozone and cannot monetize its debt as the U.S. was able to
do.
Leaving the Euro would not be a solution to these problems for an economy the size of Spain. The domino effect would be inevitable, Italy being the first to suffer its effects.
Watch the N.Y. Times video: http://nyti.ms/LpeVgN
It is sad to know that there are certain problems that needs to be solved. People in position should think of a better way to improve your real estate business in that country so that progress can be achieve.
ReplyDeleteThe pain in Spain...
ReplyDeleteThis post is really interesting, I never thought that the beautiful Spain have a problem like this and I am sorry to hear that. Hope to survive this problem soon. Thanks.
ReplyDeleteHope it will not happen on land for sale here in our country.
A thoughtful insight and ideas I will use on my website. You've obviously spent a lot of time on this. Well done!Dream Land in Klei3at
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