Looking around Europe Ian Forrest invites market observers to worry about Spain. He warns that peak to trough, the country’s housing market could drop 30%, and generally puts a downbeat mood on this snowy Monday morning. Let’s hope he’s just jealous about the weather.
The Bank of Spain has doubled the amount local banks must set aside to cushion repossessed property losses, and with liquidity already hard to come by, the banks have no option but to sell their properties…We’ve all seen the devastating impact of a 30% drop in housing prices in the U.S. Imagine what it might do to a country that already has the Eurozone’s second-worst unemployment rate (nearly 20%, second only to Latvia), whose credit outlook has been downgraded to negative, and whose budget shortfall for 2009 is five times last year’s levels.