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Spain's "ghost towns" challenge government officials' assertions that Spain's banks have fully...

Spain's "ghost towns" challenge government officials' assertions that Spain's banks have fully accounted for the losses they face. “We find it impossible to reconcile the banks’ claims of asset quality stability and the macro facts," says a report from Société Générale.
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Comments (15)
  • Papaswamp
    , contributor
    Comments (2219) | Send Message
    What? banks and governments fudging numbers?!
    19 Dec 2010, 09:30 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
    Ahh yes, Spain must have read, "Mark to Make Believe for Dummies- The US Banking Edition".
    19 Dec 2010, 10:31 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4196) | Send Message
    Don't tell bbro.
    19 Dec 2010, 01:54 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
    or econdoc (aka-Bernanke Print Club for Men President)
    19 Dec 2010, 02:18 PM Reply Like
  • Leftfield
    , contributor
    Comments (3938) | Send Message
    "We find it impossible to reconcile the bank's claims of asset quality stability and the macro facts."


    A lesson for Americans also who should learn to trust the evidence of their own eyes over rampant government and bankster lies.
    19 Dec 2010, 11:02 AM Reply Like
  • Eamon Keane
    , contributor
    Comments (311) | Send Message
    The sooner they accept this, the better. From Ireland's situation, our finmin Brian Lenihan said the following in May 2008:


    "However, what we do know is that the underlying demand for housing remains strong, driven by a relatively young population and continued inward migration. While we may experience a year or two of sub-50,000 completions, it is reasonable to expect over the medium term that annual completions will return to sustainable levels which will remain high by international standards, reflecting the strong underlying demand for housing in Ireland."


    The result today: over 600 ghost estates with some 3-400,000 empty houses. All documented via google maps and streetview on
    19 Dec 2010, 11:47 AM Reply Like
  • nobby73
    , contributor
    Comments (1177) | Send Message
    "Unlike American banks, Spanish banks have done little to open their books."


    American banks have opened their books? I must have missed that one....


    Globally, we have ghost towns across America, Spain, Ireland, China etc etc. Wherever the finance and real estate construction was rampant or even in China's case still is, there are massive amounts of troubled assets sitting on the banks books at totally unrealistic values and the banks are in denial about the length of time it takes to rekindle the public's enthusiasm for residential real estate. The extend and pretend game will continue for as long as it can, but at some point it will stop.
    19 Dec 2010, 01:26 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
    SocGen report...from last April - 9 months ago?


    I know that most of you haven't the foggiest about the Efficient Market Hypothesis or even what really moves markets but even the brain dead must see that this "news" is well baked in. In fact to continue it is fully digested.


    19 Dec 2010, 01:40 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
    The only thing "fully digested" is your ability acknowledge the truth. However, you're consistantly inline as a Bernanke fan, so I expect no less.
    19 Dec 2010, 02:21 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2221) | Send Message
    Sure Doc, I bet you are an expert on Spanish real estate as well.


    Your hero dismissed the subprime problem in 2007!!!


    That is after even PBS had shown the problem to a wide audience.
    19 Dec 2010, 09:43 PM Reply Like
  • David White
    , contributor
    Comments (4376) | Send Message
    Econdoc: What is baked in is the Spanish banks' ability to cover up the Spanish RE disaster. As the NYT article states Spanish RE prices have only fallen 12.8% so far. Yet Spanish RE went up much faster that US RE (and other EU RE). Some are estimating that the Spanish RE market will fall another 30%-40%. Current baked in numbers seem to be for 5% at most. If the naysayers are correct, the situation is very far from "baked in". I note that US RE prices have fallen 2-3 times as much on a percentage basis. Plus the US RE problem was never as bad as the Spanish problem. The numbers don't add up. The NYT pointed out that big Irish banks failed after passing the supposed stress test. That test only tested the 10% of banks' assets that were in their "trading books". In Spain's case with regard to RE that would be mostly MBS's. Spanish banks only put the best RE loans in MBS's. None of their more questionable RE loans were ever stress tested. The whole thing is being covered up so far. Eventually this time bomb will explode.
    19 Dec 2010, 05:56 PM Reply Like
  • greenzulu
    , contributor
    Comments (217) | Send Message
    Spanish real estate hasn't fallen much because the banks warehoused the empty houses, with the collusion of the government, rather than put them on the market, since selling a single one at a 50% discount would mark to market their whole portfolio and make them instantly bankrupt.


    Which they are, in fact. As the old Agent Orange saw went, " I died in Vietnam and didn't even know it."
    19 Dec 2010, 09:07 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2221) | Send Message
    The Spanish banks are engaged in extend and pretend like everyone else. They either refinance anything in order to keep people from defaulting or they IGNORE the fact that people do not pay.


    Good luck with your illusions.
    19 Dec 2010, 09:44 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (1001) | Send Message
    Don't you worry about a thing. I am not an expert but knowledgeable people on SA have told us time and again that no important bank (the so called money centers) anywhere in the whole world will be allowed to fail. This is how it works. The banks mark the non-performing assets on their books at some value; what value does not even matter because the banks will keep these assets there for as long as it takes. Meanwhile the central banks will do their best to recapitalize the big banks. For example, they will lend them money at 0.25% and the banks will turn around and lend to the governments and the populace at whatever rates they wish and if they wish. The passage of time, the government largess, and the slow recovery of the assets will eventually make the banks solvent again even in the outdated, Accounting 101 meaning of the word "solvency" which by the way is irrelevant when you talk about big banks. Because big banks can do anything they want, make the stupidest investment decisions they can, leverage themselves up to the eyeballs and then waste mountains of money taller than the Himalayas, and still survive because this is how capitalism really works. This is what I learned from the knowledgeable people on SA. I am just saying.
    19 Dec 2010, 10:38 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2221) | Send Message
    This what the Japanese have done and what many other governments (the US included) are allowing their large banks to do. However, the strategy is not available to a country without control of its currency (like Spain).
    20 Dec 2010, 07:40 AM Reply Like
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