Sunday, February 27, 2011
A few days ago I was sent a link to one of the most hysterical articles about Spain and expats in Spain that I have seen for a long time. Sadly, it was from one of the major UK tabloids and, equally sadly, seemed to give an impression totally at odds to what I had written a few days previously about life in Spain.
Of course, as anyone who keeps up with this Blog will know, I have been nothing if not a Cassandra when it comes to the Spanish economy and the Spanish property market. For five years I have been banging on about how (and why) a crisis would occur, the consequences of that crisis and how long any recovery from it would take.
However, at the same time, I have never missed an opportunity to emphasise how good life in Spain can be – nor what benefits Spain has offered (and continues to offer) to either those people coming here to live permanently or just for their holidays. For me to have done otherwise would have been pretty odd, frankly.
I say ‘pretty odd’ because my family have happily lived in Spain, permanently, for the past eight years. Meanwhile, the vast majority of expats that I know would state the same thing, namely that they enjoy their life in Spain and that their move here has been a success on a range of different levels.
Of course, there are people who have found that their life in Spain has not worked for them. Indeed, some have been ruined by their move here. This has often been due to a poor property purchase (both in terms of location and inherent flaws in their property), unrealistic expectations or an inability to earn a viable income.
Certainly, Spain is not a paradise and there is no getting away from the fact that there are problems associated with living in Spain. Equally, it is true to say that moving to Spain (see my book on the subject) must be done with exceptional care to make sure that, once here, life in Spain works for you. Make a mistake and buy an illegal property, for example, and all your happy dreams will quickly shatter.
The same is true for any illusions about making a living in Spain easily – particularly during the current ferocious economic crisis. As I have written in ‘The Secrets to Working and Making a Living in Spain’ you have to be cautious about the prospects for making a secure income. It can be done but the days of ‘strolling’ into Spain and easily picking up well paid work have long gone. That is not to say that you cannot make money here – but that you have to be pretty canny, well prepared, risk averse and have a viable ‘Plan B’.
In my experience there is a common denominator amongst the people I know who have moved to Spain permanently and who continue to enjoy life here. This is that they are invariably people with realistic expectations and sound finances – who bought their properties in Spain with infinite care and attention to detail.
So, if you are planning to live in Spain then know what you are doing – well before you come here. Plan carefully, have realistic expectations about what life in Spain will really be like and, for Heavens sake, buy any property very carefully – indeed, with far greater care than you would do in your own country.
One thing is for sure – Spain can provide a wonderful quality of life. It does for many people and, if you exercise care, it will do for you. So, do not take too much notice of hysterical gloom and doom articles. Their stories may be true for some people but the silent (and contented) majority of expats here are likely to be looking on amazed at what is quoted…
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Saturday, February 26, 2011
limit on motorways to 110 kmh from 120. This has been done in an
attempt to reduce fuel consumption by 15%. My experience so far? Lots of cars flying past me but seriously many many people, more than
expected to be honest, are sticking to it! Spain still surprises at times. In the past I would have expected
people to speed up just to make a point, Spain is traditionally
anarchic. One thing remains the same though. The signs still say 120 limit.
Friday, February 25, 2011
Mortgages in Spain, Spanish banks and the Spanish property crash
Well, I thought I had seen it all when it came to the Spanish property crash, Spanish banks and their lending – most particularly with regard to mortgages in Spain. That was until I read an excellent article in El Pais (one of Spain’s leading national newspapers).
As you will see from this article, which is well worth reading throughout, (and is in English), sub prime mortgages in Spain were as bad as those sold in the US. Deliberately baffling to the people they were aimed at, they were no more than a sophisticated, institutional con and were partly responsible for the Spanish property crash.
In a way, the worst part about sub prime mortgages in Spain was that they were a con that everyone within the industry knew about. Indeed, it is impossible not to come to the obvious conclusion that their very presence in the marketplace indicated that the regulators and Bank of Spain knew about them as well and were colluding with the lenders. If they did not – then the inevitable accusation must be that the regulators and Bank of Spain were deeply negligent in not knowing.
Needless to say, the question in Spain, just as in the UK and the US, must be to ask what has become of the senior executives of the lending institutions behind sub prime mortgages? What has happened, dare I ask, to the chiefs of the Spanish banks who were involved in sub prime lending?
I suspect, like elsewhere in the world, the answer is: nothing.
I am struck by several comments made in the El Pais article, one of which is made by Mario Barguño of Equilibrio Financiero, an insolvency expert, who says: “The banks were caught up in a race: whoever wasn’t lending money was losing.”
No control, no long term strategy, no regulation – just crazy lending that anyone, with an iota of sense, knew was madness. However, despite the obvious risks, the rush for ever greater sales commissions and bonuses mesmerised everyone, even those under a duty to act…
Of course, markets are driven by the old cliche of ‘greed and fear’. That is only human. But then for what exactly are democratic populations paying economists, national banks and regulators?
To ensure that neither excessive ‘greed’ nor ‘fear’ gain the upper hand and that scams are not perpertrated upon their populations. That, surely, is the underlying ‘definition’ of regulation in economic matters.
The odd thing about the El Pais article is that it mentions UCI (linked to one of the major Spanish banks, Santander) – which brought back memories for me. Some years ago UCI contacted me to see if I wanted to recommend clients to them for mortgages in Spain, for which I would receive a handsome commission.
I duly had a meeting with UCI in their swanky offices in Valencia. There, I spent half a day being briefed about what most of us would describe as self-certification mortgages. In effect (but not fully appreciating it at the time), I was being asked to become involved in selling sub prime mortages in Spain.
The trouble is that I never really understood what they were on about.
‘It does not matter what they (the borrowers) can really afford to pay’, I was told repeatedly. ‘Put anything down!’
‘Even if,’ I remember asking, ‘they say they are earning half a million euros a year – when I know they are not and they have no supporting paperwork?’
‘Don’t worry,’ was the answer, ‘we will lend depending upon the property valuation.’
None of this made much sense to me – but then I only have a humble law degree and have never claimed to be an economist, despite having worked as an equity trader in the UK City.
Of course, valuations on properties were conducted by the Spanish banks and no doubt by UCI too. However, the valuations were notorious, for years, for being consistently incredibly distorted (upwards) – which ‘justified’ the amounts lent. Everyone in the Spanish property industry knew about this. Clearly, a ´blind eye’ was turned, equally consistently, by the Spanish banks to the actual capacity of a borrower to make sustained mortgage payments on the amounts lent
An absolute, utter lunacy – which made the Spanish property crash completely inevitable and yet so totally unnecessary! The crazy lending was like squirting aviation fuel onto a roaring blaze.
Frankly, it is the unnecessary nature of the Spanish property crash that so angers me. I am still bemused about how it was ever allowed to happen. Furthermore, I am staggered that the negligence of the lenders and the regulators has ended up without the responsible higher executives being heavily sanctioned…
RELEVANT INFO. How the subprime mortgage found a home in the Spanish market and the Spanish economy – meltdown or all okay?Share and Enjoy:
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Thursday, February 24, 2011
Tuesday, February 22, 2011
Culture Spain, alive, vibrant and the best reason to come to Spain!
After eight years living in Spain, I remain convinced that the best reason to come to Spain (either as a holiday maker or for permanent life) remains the intrinsic culture of Spain. This may seem odd when most people’s focus on Spain is centred upon the wonderful weather, great beaches and cheap(er) housing than Northern Europe.
In fact, the culture of Spain is what sets it apart from many other countries that also have a terrific climate, reasonably priced villas and dreamy beaches. Most countries lapping the Mediterranean can probably boast those benefits but can they promise to deliver more than that?
Spain, to its credit, certainly has a culture that goes well beyond just its climate and the caricatures of Flamenco, beach holidays and bullfighting. Indeed, the past few years have shown Spain to be an extraordinary country and this has much to do with the nature of Spanish themselves.
Certainly, with the current problems in Egypt, the Middle East, Greece and Italy, it is hard not to look upon Spain as anything other than an impressively balanced and secure country. This is despite these dreadful economic times and the economy of Spain being stunned. Indeed, apart from some half hearted (and very short) strikes, life has continued as normal – with violent, mass demonstrations being noticeable by their complete absence.
Meanwhile, one of the most important aspects to Spanish culture is the general Spanish tolerance to foreigners. In that regard the country is impressively user-friendly – particularly to English speakers. English is now the obligatory second language and Spain, after well over thirty years of mass tourism, has an infrastructure that makes it ideal for English speakers and this is as true for holidaymakers as it is for anyone wanting to set up home in Spain.
However, one of the other cultural advantages that Spain has over many other (particularly ‘new’) countries is its overall familiarity to North Europeans. By this, I mean that it has a complicated, structured culture that goes back thousands of years. This is combined with cities, towns and villages that are genuinely old with architecture that is interesting and varied.
Indeed, Spain ‘feels’ interesting in a way that ‘newer’ countries never can – for long. The depth of Spain’s history and the very culture of Spain is writ large wherever you go, with each and every area markedly different. This is as true of the high streets and shops as it is for the buildings, the landscape, the Spanish themselves and their particular customs.
Unarguably, one of the enduring delights of Spain is the way in which the country has embraced modernity – whilst retaining a pure and intact, localised culture of its own. This is most obviously displayed in fiestas, which vary not just between regions but also between villages. Each is different and each has retained its vibrant integrity, despite Spanish life having changed radically over the past 100 years.
So, if you are looking for more than just great weather and super beaches then Spain is somewhere to be highly recommended. It has a fine infrastructure, a wonderful history (evident wherever you go) and sufficient to keep you interested for a lifetime!
Of course, Spain is not a paradise. It has its problems (property legalities being one!) but as a place to live and holiday it must rank amongst the top places in the world – and jusifiably so. Certainly, some 50 million people a year feel the same…
Can you get better than that? Maybe – but the critical and complicated mix of things that make a holiday (or permanent life) in a country work well is not found easily!Share and Enjoy:
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