Spanish Economic Crisis

To be honest I cannot see Spain, or indeed any other, country splitting from the Euro.  Consider it as the 'United States of Europe'.

It's just a shame that this damm fool country did not join too but instead sat on the fence.

Stong EU countries such as Germany and France cannot, and will not, let weaker countries fail or the whole of Europe would be put in jeopardy.  I really cannot see this happening.

I just wish our stupid Government would finally commit to Europe properly and thus support it instead of dipping in and out at a whim.  We have, rightly or wrongly, come this far so now to talk of pulling out of Europe is just a joke.  Sorry slightly off topic!

Can i get off my soap box now

Ps. I agree that now is an excellent time to buy in Spain if you wish to buy a holiday home or wish to live in Spain.  But proceed with caution and only buy completed houses on completed complexes or resale property (in my humble opinion).  The prices look to me as near as dammit as low as they are going to get (again in my humble opinion).  But please dont buy for investment! and please dont overstretch yourselves.

Answering TP1's comments:

I can promise you that there is a lot of talk in financial circles about a possible breakup of the Eurozone.
However opinions vary and some say, like you,  that the stonger economies will be prepared to bail out the weaker in order to further the idea of a strong Euro to replace the USA dollar.
Nevertheless the European community would insist on taking the defaulting countries into "administration" as far as the bail-out package is concerned. The big question is: Would countries like Spain and Greece submit to this loss of control over fiscal policy?

I am not convinced that they would. The other options they would have is an IMF bailout but they would have to leave the Euro of course. Ireland seems to be getting its act together with the new budget. Someting has to happen as far as the others are concerned but who can say how it will pan out in the end.

An interesting comment from an article at http://www.finfacts.ie/irishfinancenews/article_1018682.shtml which places Spain at the top of the "misery list" -

"Moody's, the international ratings agency has ranked Spain as top of its Misery Index  - a metric which adds a country's fiscal deficit and the unemployment rate - and Ireland gets a fourth ranking.
Spain, is followed by Latvia, Lithuania, Ireland, Greece and the UK. The US is eighth - just after Iceland.
The original “misery index”  - an addition of inflation and the unemployment rate  - was invented by economist Arthur Okun in the 1970’s while he was a scholar at the Brookings Institution in Washington DC. Previously he had served as a member of President Lyndon Johnson’s Council of Economic Advisers and a professor at Yale."

Probably the most informative artice is from the Financial Times - Will rising debt cause a Eurozone breakup?
OK, even the FT writers are not always right but I am just saying that a Eurozone breakup is being discussed seriously. Please have a look and tell me what you think.

Homefinder

Bill,

you asked "If Spain splits in some way from the Euro (even to a Zonal Euro rate) how will I fare?"

The advantage of Spain exiting the Euro would be  for them to run a devalued local currency to improve their competitive advantage.

Thus running costs for Brits  that are paid from Sterlng income (Pounds) will be lower (probaby by 15 to 20%).

The effect would an increase in tourism and perhaps inward investment as it would lower the cost of acquiring Spanish property.

But for anyone wishing to de-invest there is the downside of lower net Sterling yield.