The British press, with suspicious unanimity, after years of praising the advantages of buying property in Spain now publish scary articles about the coming of a crash in the property market in Spain and the effect it is going to have in the Spanish economy.
Now that they have got the right wing in power in Germany (Frau Merkel) and in France (mr Sarkozy) and in Poland (the twins) and of course in the UK (Blair-Brown) they publish these stories to weaken the only Socialist government in Europe, Spain’s Zapatero. They have always done the same: attack the Socialists, praise Franco and Aznar.

«The rape of Spain should be a warning to planners» hollers the Torygraph. These well-known advocates of socialist planning write «Spain has become the textbook case of how uncontrolled laissez-faire economics, brought to the boil by corruption, can destroy a beautiful country.» Maybe, but it came to the boil during the government of Aznar, that little darling of Bush and Blair. Now the socialist Zapatero has to put a little order in the corruption that Aznar and his Populist Party let loose in Spain, and in Marbella, for example, the whole Town Hall is in jail, the latest two mayors and such celebrities as the Spanish folk singer La Pantoja.
The case of La Pantoja has all the characteristics of Spanish slapstick comedy. She is the beautiful widow of a rich bullfighter, Paquirri, who died in the ring gored by a bull. She and her son got a really big inheritance, a big ranch, an stupendous house.
For a long time La Pantoja couldn’t find a man as well endowed with the right manly attributes as Paquirri. So she entered in a same-sex relationship with a radio producer, Encarna.
They were the butt of innumerables jokes and even funny tv shows.
Encarna died, she was also a very rich woman, and left La Pantoja -who is the very enbodiment of feminity, with a long black hair, soft femenine hips, a good ample bossom, a beautiful face and a strong, sensual and sensitive voice- another big inheritance. This broad is a money making machine !
Later she shacked up with one of the mayors of Marbella, the infamous Julian Muñoz, (he’s in jail now) and her bank accounts began to show large movements of money that this corrupt official got from the builders in Marbella. It was a mare’s nest of corruption, black money and La Pantoja has a lot to answer for at the tribunals -she’s free for now, on bail, and singing very significant songs to full audiences, who both praise her for her bravery and scream at her to give back the money they stole.
In Spain drama is always very near to comedy, it is the national character.

The article in the Torygraph I wrote about says that the rape of Spain is a terrible warning to those who seek to speed up our planning system local accountability and the right to object to major developments. then it goes on to take a swipe at Gordon Brown.
You don´t expect the Torygraph to say a word of truth in this matter. It was precisely because Aznar gave the local authorities the right to plan -before Aznar it was a slower process, centrally managed from Madrid- that the authorities and the people, let’s not forget that, saw the opportunity to make a killing in the property business, through graft.
The Torygraph always keeps up this charade that butter doesn’t melt on the lips a British town planning commision.

Strangely, or perhaps not so in view of what I wrote about the positioning of the right wing politicians in Europe, The Guardian says much the same about our predicament:

Storm clouds gather over Brits’ favourite place in the sun
On the one hand they praise the country for building 800 000 houses in the year 2006, more than the rest of the European Union together.
Well, Brits, we Spaniards can teach you how to build houses.
On the other hand they say that the liberalization of the market has put housing available for the first time to people who could not afford it before, because of lack of credit. And on the other hand (trust British journalists to put always more than two hands in anything) that young people can not afford to buy a house and they are staying with their parents for longer and longer years. When the Brits write pure nonsense because they do not know what they are talking about, they boast of it being a national characteristic, as being untutered in logic not like the logical Continentals.
The houses are built, and they keep on being built at breakneck speed. At the same time no one buys them, not in such great numbers anyway, they say. «The Spanish Property Register says he has seen a downturn in (British) interested user over the last six months. In January we were getting 2000 hits per week… In recent months it has fallen as low as 900.»
But they are British and I can believe that there isn’t an infinite quantity of them who can afford to buy a house in Spain, the same as there are just so many Americans who can afford an apartment in Miami. There are also many houses on offer from as far away as Dubai and South Africa and Australia, and Talinn and Tirana, indeed.
In Spain the housing market for expatriates and for Spanish are two very different things, but The Guardian puts both together.
As you can see it is a very baffling situation and it merits to dwelve a bit deeper.
I’ll show you how to use the same arguments of the Guardian journalists and come to a very different conclusion.
Lets look at this graph printed in the Guardian’s article that shows the evolution of average change in house prices in the UK, the US and Spain with the scary title «Bubbles and Busts».


Study it very carefully. ¿Notice anything? You don’t need to be an economist: if you paid attention in Science class you will notice that we have here three graphs but only two processes going on.
The UK and the US graphs are very similar. They show sharp quartile up and downs. We see here the society of the «Anglos» reacting quickly to changes in the market, well informed of the economic posibilities and not affraid to take risks and buy and sell according to their information on the markets. They are cultured, well informed societies, with many financial alternatives.
Leaving the US aside (I am not that familiar with them, but I fancy myself I know the Brits) at the slightest notice the Anglos sell and put their money in other assets and then buy back and put it into property when they believe it is the right thing to do, that is, when they think they are going to make some money. They do it at a moment’s notice.
The Spanish graph is totally different from the other two. It has no quartile sharp up and downs, rather it keeps a stately march upwards, seemingly insensitive to market forces, then starts a steady decline and it is now more or less at the same position in 2007 as it was in 1997. Maybe a bubble but hardly a bust.
Compare the Spanish graph to the drama of the Anglo’s graphs with their sharp upswings and falls.
I came to the conclusion that both Anglo’s societies are very similar in their reactions and totally different to Spanish society. Which is obvious if you know anything about the three countries.
Spaniards do not sell their properties, even if bought to speculate on, and then put the money in the stock exchange or bonds or anything. The financial education of most Spaniards is very slight, nay, non-existent. They fear that if they put their money in the Spanish Stock exchange they will be ripped off by the crooks that move there like sharks in dark waters.
Most Spaniards do not read newspapers anyway, those very few who do read the papers do not understand the financial news and they do not trust anything they read on these matters, fearing, with good reason, that some crook is going to swindle them out of their money.
Last year there was a financial scandal, that also grew under the government of Aznar and then Zapatero had to lancet the boil. Hundreds of thousands of peasants had put their savings on worthless postage stamps. A pyramid scheme, promoted by the people of Aznar and his Populist Party, that blew up and has destroyed the savings of many thousands of people who can not afford these losses and do not understand that the money they put into buying worthless bits of paper has dissapeared into thin air. ¿Do you think they blame Aznar? The bloody illiterates saw the pyramid growing and growing under Aznar and then destroyed under the socialists, try to explain to them that Zapatero has not stolen their money.
They know that the swindlers will be out of jail in five years time or even before, and the crooks will enjoy the money they have salted away in the Bahamas or Montevideo.

Indeed there has been an stupendous increase in the value of property.
Take my sister’s flat as a typical example. My sister, and her husband and her family, live in a working class town, near some cement works that contaminate the whole town with cement dust and smoke something awful. Her flat is a typical working class dwelling, in a third floor, no lift, 100 square meters, marble floors, air conditioning. She bought it some years ago for one and a half million pesetas – I do not handle euros so well in these matters. It was a fair price, later prices in the building went up to like three million pts, a not irrational increase.
The neighbour, a postal worker, paid for his flat eight million pts. two years ago. It is empty, he lives somewhere else. It is a typical investment of the Spanish working class. ¿Do you think the mailman is going to sell the flat and buy shares in a hedge fund or something? No chance. He has the flat and if some twenty years on he needs the money he will sell for whatever he can get and if it is more than what he paid, he will count himself lucky and if he losses some money, well, that’s it.
Absolutely typical, I know hundreds of cases like that. That’s why the Spanish graph has this kind of buffering effect on it.

When I flew back last week from a holiday in Spain, do you know the last thing I saw? A dozen cranes each side of the runway raising up more houses. ¿ Crisis, what crisis ? Because another thing that foreigners do not understand is that Spanish builders are not sharp university graduates. Most of them are glorified bricklayers who made good by hard work, bullying their workers and handouts to local officials. And if they do not build they are unemployed, because that is the way the business is. And no builder is going unemployed if he can help it and the only thing they know is to put more bricks one on top of the other.
The most powerful building companies like Dragados y Construciones y Contratas (my nephew works there, so I should know) are a different matter. They have positioned themselves in the foreign markets and for example they are going to build the Underground in Dublin and carry out building work in the USA and in the Middle East. The small companies, that is most of them, do not have this escape valve and have to carry on in Spain regardless.

Why then, with so much building going on, the price of working class dwellings goes up and stays out of reach of the working and young profesional class? The mileuristas, as they are called for the most frequent monthly salary, a thousand (mil) euros.
In Barcelona they right now sell a flat 11 mts square (not quite 3 mts x 4 mts) for 90 000 euros. The journalists joke that the flat is «totally furnished» and if you put a cockroach inside it will be «totally inhabited».
Spain is after the USA the biggest receptor of inmigrants in the world. Six million in a few year, more than Six Hundred Thousand in the year 2006. They come from Latinoamerica and all over the world -one in four Ecuadorians are working in Spain; there are more Uruguayans in Spain than in Uruguay; flimsy ships carrying Africans try to cross to The Canary Islands from far shores of Africa; car loads of Eastern Europeans slip through the borders.
They are young, they need jobs and a place to live and it puts a tremendous strain in our resources. They do not live in posh and corrupt Marbella, they live around the big cities (Madrid, Barcelona, Valencia) and they compete with the young and the poor Spanish for living space.
No way the demand for working class dwellings is going to stop.

The Guardian claims that if the building sector collapses because of the British speculators moving on, the entire economy of Spain will go with it.
As usual the Brits overvalue themselves, they believe they are the salt of the Earth. If a good number of Brits up and sell, and move on to Dubai, it will be even a good thing for Spain: Where there is a seller there must be a buyer and it means fees, lawyers, paperwork, that is good for the Spanish economy.
¡ Please, Anglo see how we Spaniards shake in fear: Sell to a German and go away !

The Socialist government in Spain expects what they call a soft landing, not a sharp crash. It is the most likely thing.


26-7-2012.  Man, was I wrong or wasn’t I?  This is my worst article by far, we are ruined, ruined!  Ambrose Evans-Pritchard was absolutely right, more than right.


Por Armando

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