A Strange Article About Spanish Property
October 13th, 2009
If there’s one thing you do this week, please make time to read the AIPP Guide to Buying Overseas Property Safely.
View the AIPP guide online. If you are at all interested in buying property in Spain or elsewhere, it really is essential reading.
Here’s an idea of what you’ll find inside its 68 pages:
- 5 pitfalls to avoid
- The role of the agent
- 10 questions to ask an agent
- How much will it cost?
- Why you need an independent lawyer
- Jargonbuster
- Essential checklist
The AIPP is an independent, non-profit organisation with the sole aim of making the process of buying a property abroad easier and safer. They’re not selling you anything at all.
This week’s news stories reminded me (as if I had forgotten) of how inextricably linked are the economy and the property market in Spain – and everywhere else.
All the while unemployment is increasing, tax revenues decreasing and inflation is decreasing, it’s difficult to see how the global property market can truly stabilise.
Personally, I believe the recent upturn in UK house prices is a temporary glitch, prompted only by a limited supply of homes for sale. I could be wrong (and hope that I am), but none of the economic indicators support rising house prices in the UK at the moment. Of course, the situation in Spain is even worse.
This article is about to go in a strange direction – don’t say I didn’t warn you.
This is directly related to the global economy and the Spanish property market, but many of you will think I’ve gone loopy – I’ll let you be the judge.
A couple of weeks back, a friend of mine sent me a link to a video entitled The Most Terrifying Video You’ll Ever See. If you haven’t seen it yet, and you have 10 minutes to spare, I recommend you watch it.
Greg Craven, who made the video, recently followed it up with a book entitled What’s the Worst that could happen?
Still with me?
After reading the book, I was reminded of an article I wrote last year entitled Deflation in the Spanish Property Market – particularly, this part:
“In 1929, the stock market collapse sucked all the liquidity out of the economy. The economy contracted, people lost their jobs and banks stopped lending because people were defaulting on loans. The problem compounded as more people lost their jobs and the supply of money fell further – causing more people to lose their jobs.
What happened next? Many believe that a solution was found in the US taking part in WW II. At that time, the US government instituted massive deficit spending, and the conscription of all able bodied men created a full-employment economy.
After WW II, governments recognised that they had paid a high price for the revival of the economy. They postured that full employment and a livelier market could have been achieved without the massive spending, destruction of property, and lost lives.”
See where I’m going with this?
Over the last couple of years, governments have been pumping money into their respective economies to help improve liquidity and relieve unemployment. There are signs that this has had a positive effect but there are also warning signs of the economy sliding back – if the money pumps are switched off any time soon.
The problem is that this pumping of money is creating a national debt which will outlast the term of the current politicians. In effect, they risk losing the next election if they turn off the money pump – and if they don’t.
70 years ago, the politicians then in power faced a similar short-term problem, but what enabled the long-term thinking which eventually solved the problem was a common cause against a common enemy. It legitimised a programme of horrendous national debt in an attempt to prevent the even-more-unthinkable from happening.
It seems to me that we face a different type of common enemy today. After watching Greg’s video and reading his book, I think our governments can be persuaded to respond today as they did in the past.
I wonder if long term, relentless investment in technology, research and industry related to reversing global warming could create a full-employment economy again, could provide the sustained boost the global economy needs? It might even turn out to be the most prudent course of action too.
I told you this would be strange.
Martin Dell, Kyero.com
