Spain: who is responsible for the property bubble? - Credit Writedowns
Spain: who is responsible for the property bubble? - Credit Writedowns
As recession takes hold, European citizens are starting to ask questions about how they were led into this, the deepest downturn in three-quarters of a century. The leading Spanish daily El Pais published a very thoughtful article today asking how things had unravelled so quickly and so spectacularly in Spain, previously one of the fastest growing economies in Europe.
America’s current economic condition
America today is burdened with deeply rooted and unsustainable economic challenges. From credit debts and loss of manufacturing nationwide, to foreign nations buying our best companies and proping up the economy with loans, these issues impact every citizen. Here are the 16 major problems America faces today:
Where is the stock market bottom?
Neil: This isn’t your usual economic contraction. If we want to construct a high probability scenario, we must develop a way to include all the probable economic factors in our recession equation, and then characterize the interaction of these factors with our culture. How will people, including governments, react to this crisis? And how will this reaction shape the probable outcome?Let’s summarize the “challenges” ahead ….
“Peak oil”? Not necessarily. Try “massive speculation”…
Perhaps 60% Of Today’s Oil Price Is Pure Speculation
The large purchases of crude oil futures contracts by speculators have, in effect, created anadditional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.
Perhaps 60% of oil prices today pure speculation
Athenians also breaking under the weight of their mortgages…
“In the Athens of 594 B.C., according to Plutarch, ‘the disparity of
fortune between the rich and the poor had reached its height, so that
the city seemed to be in a dangerous condition, and no other means for
freeing it from disturbances…seemed possible but despotic power.’
Good
sense prevailed; moderate elements secured the election of Solon, a
businessman of aristocratic lineage, to the supreme archonship. He
devaluated the currency, thereby easing the burden of all debtors
(though he himself was a creditor); he reduced all personal debts, and
ended imprisonment for debt; he canceled arrears for taxes and mortgage
interest; he established a graduated income tax that made the rich pay
at a rate twelve times that required of the poor; …he arranged that
the sons of those who had died in war for Athens should be brought up
and educated at the government’s expense. The rich protested that
his measures were outright confiscation; …but within a generation
almost all agreed that his reforms had saved Athens from revolution.”
When the going gets tough…you are on your own!
photo credit: Busko
It is interesting to see how the social dynamics between individuals are mirrored exactly in the same way in a global and macro-economic scale. Whereas in the good times states cooperate with each other with more flexibility, when the situation worsens, not only each system actor shuts down to outside cooperation, but what is more alarming, they look for scapegoats to explain their own failure. This has already started:
Bloomberg on migration and the UK
Business week: senators target visa loopholes
On a global scale, as the economy worsens -and these emerging forces are pushed to greater extremes by populist politicians- this has historically lead to war.
Will it be different this time?
It may be so, if we consider the cracks already starting to appear at the local level. In the case of the state of Philadelphia, notice that the local government is going against national commercial rules with this decision:
http://www.reuters.com/article/gc03/idUSN2830318520080328
This has no recent-history precedent but may well be a sing of things to come, leading the the splitting of nations into smaller, self-administered regions. Expect the same growing tensions as well within the European Union, as the richer states start to drag their feet on the Union idea as they feel they are subsidizing in excess the poorer states…
Capitalism eventually consumes itself
In the nonrelenting pursuit of maximum efficiencies, capitalism self destructs when too much wealth is gone to one side of the scales of society:
CharityFocus Blog: Parable of the Shoe Salesman
Before wrestling over solutions, we as business people must first sit with the uncomfortable truth: The growing disparity of wealth is not some accidental side effect of capitalism. It is the fundamental design of the system.
Biflation?
I think what we’re seeing is Biflation.We’re seeing price increases on commodities which we compete for on the world markets (wheat, oil, etc) and price decreases on things which require credit to buy (houses now and eventually cars).
To some extent price increases on the necessities of life (like food and fuel) will actually lead to more decreases in things like housing because money that could have been used for the house payment now has to go into food and fuel.
More participation of young people in elections
Good news for a change!
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About Javier Marti
As an independent strategy consultant, futurist, speaker and founder of Trendirama.com Consulting, Javier is dedicated to help organizations, small businesses and individuals to optimize systems, increase profits and make better choices in business and in life. He is the author of the book "Mobile, Domains & The Future"
When not consulting for clients, Javier shares his knowledge and experience through information-packed, yet entertaining presentations in a wide range of subjects in English and Spanish.
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