Going Through Denial, Spain Suffers Painful Housing Hangover
15 May 2012 @ 00:36
Unlike the U.S. and U.K., Spain has been agonizingly slow to accept the fact it got drunk on a massive real-estate bubble, exacerbating and prolonging the hangover now reeling through its financial sector.
While it has begun to make amends with new measures aimed at cleaning up the mess, Spain and its troubled regional banks have yet to recognize the depths of their dilemma by taking the necessary painful writedowns.
“Like any psychological problem, first you’ve got to admit you have the problem,” said Jan Randolph, director of sovereign risk at IHS Global Insight. “Writedowns have been insufficient. They need to bite the bullet harder.”
As eurozone leaders debate pushing Greece out of the monetary union, the markets are expressing serious concern about Spain, which because of its size and troubles remains the most important country in this never-ending debt crisis.
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