Spain ... economy, pain, protests: what's the future?

[aspasia]

Protests across Spain at new government?s employment reforms

The new conservative government in Spain unveiled employment reforms on 10 February, and although some will say that they are long overdue, others are saying that they will destroy jobs rather than create them. The measures cut severance pay and give employers more flexibility over firing staff: there will now be a payment of 33 [...]

Source: Protests across Spain at new government?s employment reforms

[aspasia]

There's a report in the BBC HERE about today's Spanish budget, and a straightforward Q&A on the "Pain in Spain" economic situation on THIS BBC page to accompany it. Not sounding good on any level, is it?

[Nova]

 

[Guanche]

My brother in law was telling us about a TV program aired in Austria about the plight of the homeless and dispossessed in Spain. The program centred on one family from the peninsular. Mother, father, two young children and an 87 year old grandmother. They like thousands of others in Spain had fallen behind with the mortgage due to unemployment. They were in debt to a total of 12,000 euro at it's peak. They had made their best efforts and repaid 9,000. However with only 3.000 euro to go the bank repossessed the house.

Some of the Austrians interviewed on the program thought is was a joke and couldn't comprehend that the bank had done this as it would not be allowed to happen in Austria. The television company filmed the eviction and the sight of an 87 year old woman on the street provoked fury amongst the Austrian viewers, so much so that the production company was flooded with e-mails and thankfully money. An Austrian benefactor has now committed to be a 'God mother' to the children and donated 400 euro a month for the duration.

Other Moines donated by the Austrian viewers will help to clear the debt but at the end of the programme it was unsure if the family had regained their house.

[Nova]

That does seem bloody-minded, especially as the last thing the banks want right now is yet more houses!!  They have more than enough of those, it's cash they need from paying mortgage-holders!  I'd have thought that even receiving a little bit at a time would be better than having another property on their books.  Of course, others agree, that's why they made the programme....

[Myrtle Hogan-Lance]

It is a ludicrous situation.  I know of a couple here whose house was repossessed because they fell behind on their payments due to a business setback.  As Nova says, the last thing a bank needs is another property on their books, so you would have thought getting any cash in monthly would have been preferable.  But no, they took the house. 

It makes no business sense to take on more toxic assets (in the sense that the properties are probably unsaleable, and grossly overvalued), or to actively court negative publicity.  I really don't understand why they are doing it.

[Perikles]

I really don't understand why they are doing it.

They do it because they can, with no consideration for the human aspect or common sense. This is how banks operate.

[Nova]

I maybe should know the authenticity of this myself, but I don't, so there.  I was once told by a bank manager here in Tenerife that the bank lends mortgages by borrowing from the Bank of Spain, but when a customer defaults on their mortgage by x payments, the bank is obliged to repay the full amount of the mortgage to the BoS.  This means that the bank doesn't just see the negative effect on the balance sheet for the amount by which the customer is in arrears, eg. 3,000 euros, but for the full amount of the loan which could be anything upwards of 100,000 euros!  If what I've just said isn't total rot, then this may help explain why a bank might prefer to go the route of repossession rather than accepting a trickle payment.

[Myrtle Hogan-Lance]

I maybe should know the authenticity of this myself, but I don't, so there.  I was once told by a bank manager here in Tenerife that the bank lends mortgages by borrowing from the Bank of Spain, but when a customer defaults on their mortgage by x payments, the bank is obliged to repay the full amount of the mortgage to the BoS.  This means that the bank doesn't just see the negative effect on the balance sheet for the amount by which the customer is in arrears, eg. 3,000 euros, but for the full amount of the loan which could be anything upwards of 100,000 euros!  If what I've just said isn't total rot, then this may help explain why a bank might prefer to go the route of repossession rather than accepting a trickle payment.

Clarification please - do you mean that they get to write off 100K instead of 3K?   

[Nova]

Your deduction is as good as mine, I'm afraid.  I've repeated everything I was told.  We minions are fed information very much on a "need to know" basis