Breaking the bad news!

[Warren12]

I guess it's that time of the week again. Another Taipan rant and graph.

[Taipan]

Well you asked for it and so ill respectfully assist.

Today we are looking at Spain. But lets see whether we can replace the word spain in many of the facts below and write the word Vancouver (well you are stars at being delusional.)



Well many of those points could be said about Vancouver.

A few days ago somebody said, "Vancouver prices wont fall unless there is another stock market crash".

Well what would cause another mealtdown? Greece? Maybe - maybe but just a nice little correction 5% maybe 10%. But itll just get everybody very nervous.

What will totally spook the market, aka overnight mealtdown Bear Sterns style would be Spain. 20% mealtdown

10x the size of Greece. But Spain will be Ok - surely I hear you say. Theyll fix all that. (Will they?)

Its only onwards and up from here. Nothing to worry about here. Buy the dip as they say.

Now is such a great time to buy real estate. So much stock on the market. 19,000 houses (approaching a record), interest rates are so low, they can only go up from here, and better get in before they tighten the mortgage rules. No need to worry about spain causing a problem in our bubble real estate market is there...... is there?

Spain's economy is bankrupt. A veneer of freshly printed euros is all that's holding it together. Within a matter of weeks, more printing will be seen as crucial to prop up banks and sovereign debt.

Like a zombie in a horror movie, this is the crisis that just won't die. Spanish government bond yields are rising yet again, wiping out any "carry trade" profits that Spanish banks were hoping to generate by borrowing from the European Central Bank (ECB) at 1%.

The ECB's three-year long-term refinancing operation loans bought Europe a few short months of tranquillity. The Bank of Spain announced that during the month of March, Spanish bank borrowings from the ECB soared from €152 billion to €227 billion.

Spanish banks are in big trouble. They must pay out depositors looking to move to safer banks and foreign institutional lenders pulling money out of the country. The only place Spanish banks can turn to replace this lost funding is the ECB. Spanish banks have taken up 30% of the LTRO loans issued thus far.

Spanish banks are propping up the Spanish government by parking these loan proceeds in the bond market. But this is just temporary, and it makes the situation even more fragile by tying the fortunes of the government and the banks even closer together. Ultimately, the funds borrowed from the ECB must be used to satisfy deposits and bonds maturing later this year.

"Weaker lenders are merely parking the ECB's ultra-cheap funds in [Spanish government] bonds until they need the money to roll over their own debts," writes Ambrose Evans-Pritchard in his Telegraph column. "That is coming due since European banks have €600 billion in redemptions over the rest of the year. Many are now stuck with losses that they cannot afford to crystallize." Considering the turmoil we'll surely see in the Spanish economy, €600 billion in maturing debt is going to be a huge challenge for the European banks.

Source: Why Spain’s Economic Crisis Will Be Good for Gold

Lets see - buy Vancouver bubble property or buy gold. You go buy the Vancouver bubble property, you know you want to. Sheeple never need to think for themselves.

[Taipan]

And as a neat little follow up to that, we had the wonderful story of the 5 major spanish banks being downgraded by S&P to junk status this weekend. - Just in case you missed it while visiting all the open houses.

And just a reminder why these banks are in so much trouble. Because of a collapsing property bubble.

From the washington post. Spain’s Bankia asks for $24B in state aid

MADRID — The troubled lender Bankia asked the Spanish government for $24 billion in financial support on Friday, the same day that a leading credit-rating agency downgraded the bank to junk status.

Jose Ignacio Goirigolzarri, the bank’s president, said late Friday that the bailout would “reinforce the solvency, liquidity and solidity of the bank.”

The request came as Standard & Poor’s downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans.

Trading in Bankia shares was suspended Friday while its board determined how much new aid was needed. The bank’s shares have experienced turbulent trading in recent weeks on fears that it would not be able to cover the massive losses it has built up in bad loans to the country’s collapsed real estate sector.

Spanish banks were heavily exposed to the country’s collapsed real estate bubble and now hold massive amounts of soured investments, such as defaulted mortgage loans and devalued property. Bankia has been the most severely hit, holding $40 billion in such toxic assets.

Bankia was created from the merger of seven regional banks, or cajas, that were deemed too weak to stand alone. But financial concerns continued to plague it — its shares have lost almost half their value since the lender went public in July.

The government decided to intervene this month, effectively nationalizing Bankia and injecting $5.7 billion in aid.

The Spanish government is trying to shore up the banking sector to get credit flowing to the ailing economy. But the cost of rescuing banks could overwhelm government finances, which are strained by a recession and an unemployment rate of nearly 25 percent.

The possibility that the Spanish government might eventually need an international rescue package — like the ones that Greece, Ireland and Portugal have sought — has kept investors on edge for months.

[Warren12]

A beaver and a bull are not the same animal.

[Taipan]

A beaver and a bull are not the same animal.

The "Vancouver is on another planet defense". Cant see it working with reality.

[tdma800]

A beaver and a bull are not the same animal.

Time and time again some foreigners who are not here like to say things are not different here.

[Warren12]

A beaver and a bull are not the same animal.

The "Vancouver is on another planet defense". Cant see it working with reality.

Not another planet, just another continent. Or another world, as in the "New World" if you prefer.

[Taipan]

Princess, two reasons im here.

1)Ive just bought a property in the BC interior, and paid value at 2005/2006 value. Had to wait 4 years to buy at a sensible price. (Not the delusional rubbish you guys go on with, but there are many delusional vendors up there, many from Vancouver, whose properties sit for years and dont sell!).

2)As a developer, im always interested in the machinations of the industry that im involved with. Techniques, methods, process, constraints and risk.
But Vancouver, has stuck its hand up on the world stage, and said, "we are some of the most delusional buyers in the world." The vendors have yelled, "its different here".

Im sorry but if you wanted to have the spot light put on you, you have. Too much product from grow ops maybe.

[tdma800]

anyone can say they bought something here

[Taipan]

I wouldnt want to admit to buying something in Vancouver at the moment. It would show that you are just an idiot.

[tdma800]

I wouldnt want to admit to buying something in Vancouver at the moment. It would show that you are just an idiot.

Takes 1 to know 1

[jesse1]

I wouldnt want to admit to buying something in Vancouver at the moment. It would show that you are just an idiot.

In some circles being called "just an idiot" is high praise.

[tdma800]

I wouldnt want to admit to buying something in Vancouver at the moment. It would show that you are just an idiot.

In some circles being called "just an idiot" is high praise.

You'd think he'd not use such words like "idiot" when he claims to be such a big developer - lol

[Taipan]

I wouldnt want to admit to buying something in Vancouver at the moment. It would show that you are just an idiot.

Takes 1 to know 1

Ill let you speak for yourself on that one old mate. Nothing to do with me

[Taipan]

Well the bad news continues to build up doesnt it. Well for everybody apart from the delusional fools who think that buying at the top of the Vancouver bubble makes good sense!

'
Beware a rerun of the Great Panic of 2008':Head of World Bank warns Europe is heading for 'danger zone' as world markets suffer bleakest day of the year so far

Far from clear leaders ready for impending catastrophe'
Raft of dismal news from around world wreaked havoc on market
Manufacturing output crashed in Britain, jobless up in Europe and U.S.
Fast-emerging economies such as Brazil and China running out of steam

The head of the World Bank yesterday warned that financial markets face a rerun of the Great Panic of 2008.
On the bleakest day for the global economy this year, Robert Zoellick said crisis-torn Europe was heading for the ‘danger zone’.
Mr Zoellick, who stands down at the end of the month after five years in charge of the watchdog, said it was ‘far from clear that eurozone leaders have steeled themselves’ for the looming catastrophe amid fears of a Greek exit from the single currency and meltdown in Spain.
The flow of money into so-called ‘safe havens’ such as UK, German and US government debt turned into a stampede yesterday.

In Berlin the two-year government bond yield fell below zero for the first time, with the bizarre result that jittery international investors are now paying – rather than being paid – for lending to Germany.

There was a raft of dismal economic news from around the world, with manufacturing output falling in Britain and Europe, unemployment jumping in the eurozone and America, and fast-emerging economies such as Brazil and China showing signs of running out of steam.
The FTSE 100 index fell 60.67 points to a new 2012 low of 5260.19 in London and the pound tumbled against the US dollar to $1.5234 – a level not seen since January.
The Dow Jones Industrial Average shed more than 200 points in New York, wiping out all its gains this year.
For those that have been paying attention, being cashed up now is the way to go. If your still in bubble markets your screwed unless you get out right now.

While it was possible to make good money over the last 10 years, you also risk losing the lot if you stay in bubble markets and remain over leveraged.

In fact if you can just maintain your current equity, the majority of people will fall backwards in real $ terms over the coming decade.

In a few years time I think we will see inflation being suddenly reported, wage increases in line with inflation, (no real increase in wages), this will work to adjust the ratio's of income to property values for banks. Consequently solving many problems for the finance sector

But the trouble is that by then all those who were over leveraged, will have been wiped out. Many who would have easily got finance now, wont be able to get finance, which will leave just those sitting patiently on equity with the ability to buy, as we see both income and properties increaing in prices inline with each other. (Thats after the bubbles have all imploded).

In other words this is the great reset, where there will be a generational transfer to a select group.

I wouldnt be surprised to see a rerun of 1980 style inflation world wide to resolve many of these loan issues.