Guest Post: Forget The Middle East, Spain Is Still The Elephant In The European Room!

Tyler Durden's picture

Forget the Middle East, Spain is still the elephant in the European room!

From Nico Pantelis of Smart Money Europe –

Now that the world is focused on the ongoing turbulence in the Middle East, Europe gets a rest from the financial hit men.  While Europe ain’t the Middle East, there are lots of connections between the two continents.

Many countries within the European Union have citizens with Arabic roots and backgrounds, and the Islam is a second largest religion. And lets face it, a few hours in a jet airplane and most Europeans can enjoy the tropical climate of the Middle East region.

But there’s more, like the large trade and financial pacts between different Arabic and European nations. Take for instance the in ‘state-of-turmoil’ Libya, who holds large stakes in Italian blue-chip companies like banking giant UniCredit or defence company Finmeccanica. That makes Italy, already a EU member in financial chaos, a first potential victim of the unrest in the Middle East.

But if we dig deeper in the EU/Middle East web, then we see more potential trouble ahead. The immense trading hub between Morocco and France, or the Turkish ‘gateway’ for Eastern Europe. No wonder few pundits are sounding the alarm bells. But hey, that’s the world we live in nowadays, with everyday a potential to chaos.

If we take a step back, away from the heat, and have a look at the bigger picture for Europe, then the real problem and threat for Europe lies within Europe, namely Spain. Spain is for Europe what Florida is for the US: one gigantic foreclosure mess! And guess what, prices of Spanish homes are still dropping, just like oversees.

The latest official drop in house prices for Q1 ’11 was 3.5 percent, which is better – or less worse –  then 6.5 pc drop of last year, but still dramatic for one of the largest EU countries, with gigantic debt loads in the property market.

And there is more where that came from! Mark Stucklin of Spanish Property Insights touts the official housing numbers:

“As a result, prices have now fallen 13.1pc peak-to-present, and by as much as 20pc in popular tourist destinations like Alicante province (Costa Blanca), home to a large stock of holiday-homes.

The problem with the Government’s data is it tends to understate price falls, which have been more like 30pc or more (peak-to-present) in coastal regions like the Costa Blanca and the Costa del sol.”

We wouldn’t be surprised if a second leg down happens in Spanish property prices. The latest unemployment figures from the peripheral country are devastating. Last month (February ’11) the number of unemployed citizens in Spain stood at 4.3 million, more than 20 percent of the working class and above 40 percent among the youngster!

And we expect the unemployment numbers won’t come down, on the contrary. So we guess there won’t be a rush on Spanish property any time soon, but only more pain to come for the housing sector in Spain. And we all know by now what that means for the already insolvent Spanish banking sector…

So when the dust settles in the Middle East, the financial hit men will return blowing up those European CDS premiums to unprecedented levels, and the time for ‘tricky’ Trichet to fire his bazooka at Spain will once again be upon us: QE3 EU-style!

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AN0NYM0US's picture

and to think that Spain was once occupied by Arabs during the Golden age of Islam and the Umayyad Caliphate of Cordoba though they didn't last long with the arrival of the Abbasids

binky's picture

"I'm sorry. The card says MOOPS." 

Hugh G Rection's picture

How is this possible. Spain is the pioneer of the green economy.

New_Meat's picture

simple equation:

1 green job equals -2.6 real jobs.

Why, this is QE to infinity!

- Ned

txapela's picture

not really.


they just have a crash and subsequent depression in their housing market thanks to their insertion into the EU and cheap lending.


nothing to do with politics, either party, Franco, ETA, the World Cup or the King.


ps. the Basque Country, which is the richest place in Spain, per capita, is not in that list. Why?

Maybe it's because that list is just of regions that are currently in a depression, but fails to paint the entire picture?

Double checked, Navarre isn't there either?


Also, it was the basque and the Kingdom of Navarre that slapped the shit out of the muslims in Poitiers, then spalled the shit out of the French and sent them packing back into France, and produced the Kingdom of Castille, which together with the basques, proceeded to slap the living shit out of the Caliphate of Cordoba (after the previously Caliphate had already been slapped, at the beginning of this run-on sentence).

falak pema's picture

Lot of shit flying around since centuries. But you forget that Spain also invented the 'Convivencia' and learnt the troubadour poetic culture, along with the old Occitans, from the Moors. Also the flamenco. Learnt about irrigation and sunny palace designs, not dark dungeons. It is called "cross fertilisation". A bit like what's happening today. While a lot of shit flies around. But that is in human nature. There are two sides to every story. One told by the shit handlers, one told by those who defend progress.

Scottj88's picture

Not to mention our 110$ Trillion dollars in unfunded liabilities...

Or the $175 Trillion dollar derivatives holdings by our banking friends... (Federal Reserve Proxies)



Bernanke estimating 5.3million jobs lost at 200,000 jobs per 61Billion in debt reduction using linear extrapolation.  Moodies estimating 18.5million at 700,000 jobs per 61billion..

What a world...

Hugh G Rection's picture

only a low-grade imbecile spells moron wrong.



Bonesetter Brown's picture

Been around the internet much, Hugh?  Try a search on "moran image"

Rainman's picture

Spain ?? I thought that mess was all properly covered up.

kaiserhoff's picture

Fallen 20% hell.  We're talking vacation homes for the upper third of the EU who should have known better.  Wake me when it gets to 80%.

kaiten's picture

I see someone in eurozone is unhappy with surging euro ;)

tld's picture

Spain is really screwed. That's what you get when you have a economy that's 50% based in the real estate sector. They just keep importing stuff instead of producing stuff like the Germans. Spain = California (without the hi-tech and cinema).

Jackfish's picture

Nice try. 

California is not so nearly Spain.

US Rankings:

Agricultural production = first by a large margin

Livestock production = second (after Texas)

Commercial fishing = first

Despite popular misconception, California is one of the leading mining states, one of the leading timber states, and first among states in manufacturing.

California has issues to be sure, but it could easily be a self sustaining country as it is a net tax payer to the Federal Government.


Orly's picture

And the cows. Don't forget the cows.

Happy cows come from California.  So does happy cheese.

New_Meat's picture

why, the celebrated town of cows--Vacaville.

... oops ... there's cow dung all around the BK 'ville.

- Ned

destraht's picture

I have the misfortune of currently sleeping in Vacaville. Its basically the military industrial complex here.

BetTheHouse's picture

Midnight Moon is a nice goat gouda from Northern CA.  Really outstanding stuff.  Worth seeking out. 

Shameful's picture

Shame that with the voter record I can't see CA standing up to Uncle Sugar as they slide into insolvency.  Sure there will be a lot of great deals as CA gov sells off state assets.  When you're tied to the anchor doesn't matter how good a swimmer you are.

sunny's picture

If Spain and Europe and the euro are in such deep shit how come the euro is pushing 1.40 on a massive run-up.  Flight to Trash?


Orly's picture

Besides the fact that the Chinese, the Japanese and the Europeans themselves have dropped at least a trillion dollars propping it up over the past two months, I'd say it is because Euros are prettier than dollars.


FoieGras's picture

Property quality in Spain is some of the worst you've ever seen. Generally low quality builds, crappy materials, amateurish finnishing. 20% drop from peak prices won't make these garbage houses bargains.

Lord Koos's picture

So, you buy a nice old house.

A Man without Qualities's picture

I saw a program about a British couple who were planning to retire to Spain.  They'd bought a place off plan, putting their savings down for the deposit. When the house was "ready", they found it built to a seriously poor standard, only a small percentage of the other homes had been sold, the infrastructure wasn't ready.   Add to that, Sterling had dropped from 1.6 to 1.2 vs the Euro (their income was a UK pension), their home in the UK had fallen in value and the best of the lot, a new freeway was being built that would be no more than 10 yards from their front door, and actually cut through the garden.  The seller argued it was the fault of the local lawyer, that he'd recommended, to find this out.  

I realize this is just one story in a million, but it's illustrative of the damage done to peoples' lives, while the bankers are back to business as usual..

falak pema's picture

That's because it was built essentially since forty years for the english investor/tourist industry. What can you offer a 'rule britannia' freak other than fish and chips wrapped up in dirty newspaper?

claycalhoun's picture

Spain and it's property are a busted flush.

A Spanish minister has been reported in the UK press appealing to Brits to buy Spanish

Property because it is now so cheap.

I think not!!

With a population of around 40 million, 8 million of whom are unemployed, they have 700,000 houses unsold or unfinished.

You buy if you wish to!!

DosZap's picture

Waste of time, I told ya, their all going D_O_W_N.

Ahmeexnal's picture

The spaniards will pull another thievery they are famous for. When they were bankrupt in 1492 during the rule of catholic queen Isabella, they robbed, tortured, killed, expelled, force-converted and betrayed both moslems and jews. Those who managed to survive and refused conversion were expelled and forced to sell all their belongings at ridiculously low prices. A large part of that loot was destined to pay their masters at the Vatican. And then the spaniards went on to rob, enslave, torture, kill, force-convert the inhabitants  of the New World, in some instances carrying out mass genocide where no one was left alive as the Taino who became extinct. Expect a rebirth of the spanish inquisition. Compared to the catholic kings of spain, the neocon industrial complex is just a girls scout brigade.

New_Meat's picture

Torquemada bitchez. e.g.:

"Compared to the catholic kings of spain, the neocon industrial complex is just a girls scout brigade."

Abmee-why that is probably the nicest thing you will say about neocons.  Do you sense any ... er ... cognitive dissonance in your comment?

Why do you say "girl scout brigade?"  Do you have some fetish you'd wish to share?

- Ned

Ahmeexnal's picture

Don't get me wrong New_Meat, neocons have done enuff wrong and will get their due punishment.

Sadly, the world has no historic memory and we hear the enlightened democracies of Europe condemning any crimes against humanity....except when they are the ones carrying them out in industrial scale in the name of their lord mr. money.


Lord Koos's picture

Gotta say, even for ZH this is a pretty stupid post, & that's saying a lot.

New_Meat's picture

My Newbie Lord, one asks with all regard to the Lord[ed. z] exaulted position and evident intelligence, what the Exhaulted Lourd would consider an intelligent, or even an informed, nor even a n0n-StupID post.  I've SaID ALot 'cuz az one of MyLordz Koouzoos SubJecTZ, i aM nEW-Meet anD aM nOt woRthY oV Ur(ine).


[ed. in brackets so lOrD can undrrstnd]

RockyRacoon's picture

You were too easy on him.

falak pema's picture

Now I know Dick Cheney's and Ronald Rumsfeld's true pedigree. They were basques masquerading as Wasps. Wrong race of stingers!

litoralkey's picture

I agree with your sentiments, but you got this one sentence wrong:

"Expect a rebirth of the spanish inquisition."  There will be no rebirth of Spain.  The women of Spain have refused to birth children for the last 35 years and have the lowest rate of births per 1000 population in Europe, and one of the lowest fertility rates in the world (1.2).  Spain will not exist as currently understood in 20 years, there won't be many Spaniards, and there will be unending waves of African/Magrheb immigration to repopulate the country.

In summation, if you plan to holiday through Spain in your lifetime, do it now, do it soon, and take lots of photos of Christian historic sites, because on average 4 Christian holy sites are attacked every week in Spain by various immigrant and atheist lunatics.



Scorpio69er's picture

Newly Built Ghost Towns Haunt Banks in Spain

Just how big a loss the banks are facing is unknown, at least publicly...Spain’s economy, the fifth largest in Europe, is much bigger than Ireland’s or Greece’s, and a bailout of its banks could be far more costly, an event that could push the government into default and end up dooming the euro itself.


cdskiller's picture

Good reference, Scorpio. Most of my extended family is in Spain. I spent several months there in the past year. The situation is far worse than here. The entire country was turned into Florida or Vegas. The ghost towns are everywhere. We are talking about a huge economy entirely driven by speculative investment. They've got 20% acknowledged unemployment that is actually closer to 25%. They thought the bubble would never burst and began paying themselves irrationally. Air traffic controllers in Spain averaged $300,000 euros a year. Spanish real estate NEEDS to drop not just another 20%, but 50-60% to get back in line with what people can afford. That will take years and over the course of those years, the ghost towns will sit empty and decay and be predated upon so much that they will be worthless. The losses from this kind of bubble always take years to work their way through the system. For Spain, it will mean collapse and 10-15 years of stagnation.

Buck Johnson's picture

You are correct, it will take years and believe it or not we will help it along in the US.  Because we are in such a calamity with our fiscal issues, that one day we will wake up to the economy imploding.

IQ 145's picture

Portugal. Not Spain.

RockyRacoon's picture

Just a damn minute.

The latest unemployment figures from the peripheral country are devastating. Last month (February ’11) the number of unemployed citizens in Spain stood at 4.3 million, more than 20 percent of the working class and above 40 percent among the youngsters!

Why quote UE ShadowStats figures for the U. S. in an article about Spain?

Oh, wait...


Sudden Debt's picture




Almost EVERY 500euro bill is located in Spain. reason is because everybody who has black money pumps it to Spain and bought real estate with it over there.

Half of those properties where paid under the counter. A house with official 200K pricing was usually payd 200K legit and 200K under the counter.


The pricedrop is more severe!

falak pema's picture

Long live the drug mafia, the russian mafia, the arms mafia, the Sicilian mafia, the Napolitan mafia, The ME Sheikh mafia. They all invested laundered money in El-Andalus. Now they wait thirty years for the chicken shit to roost, fester and turn to fertiliser. Wahoo! what a return of cleaned laundery!

Volaille de Bresse's picture

"Also, it was the basque and the Kingdom of Navarre that slapped the shit out of the muslims in Poitiers"

Utter BS. The Basque country had already been conquered and invaded by the Arabs. At Poitiers in 732 it's Charles Martel who stopped them and their leader Abd El-Rahmann, near the Loire river.

El-Rahmann had first conquered Spain and the Basque country then moved up north and destroyed Bordeaux. He was killed at Poitiers.

101 history lesson here...

Volaille de Bresse's picture

And don't forget the latest scam from our friends in Spain. They exported tons of cheap albacore tuna as premium red tuna by simply injecting in the flesh of the fish a red alimentary colorant made from beetroot...

Olé! .