Spain's Housing Crisis Deepens

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

Luar na Lubre: Camiño de Caión

Luar na Lubre, one of Galicia's best-known folk music bands has just released its new album "Mar maior", which includes the song "Camiño de Caión" (on the way to Caión).

Today the group performed the song live on the Spanish Public Radio Station (Radio Nacional de España) on the show "En días como hoy"

You can find the song lyrics on Luar na Lubre's website: http://www.luarnalubre.com/letras_disco.php?cat=226&id=180&idioma=es

The EU requests that Spain remove tax breaks for home buyers

It's one of lime and one of sand for Spain's current real estate market scenario.

On a negative note, we find the European Union's harsh criticism of Spain's fiscal policy, especially regarding tax deductions for home-buyers.
We should soon witness to what extent the possibility of a Spanish bailout — which still clouds Europe's skies — or the inevitable recapitalization of Spain's banks, mark government policy regarding tax exemptions for home buyers, a likely rise in the VAT rate or a further adjustment in housing prices. With this outlook, Europe's request may soon become Europe's demand.

On a more positive note for mortgage payers is the decrease of the Euribor rate in the month of May. As you can see the good news fits into just one, short sentence.

For the full story (in Spanish):

bruselas pide a españa retirar las desgravaciones por compra de vivienda (idealista.com)

Un alivio de 730 euros para los hipotecados (ventadepisos.com)