Spain and Ireland's Economy on the verge of Collapse

"like i said"

yup, you're the only one

How about this scenario dco - European economic decline leads the ECB to lower rates, which strengthens the dollar, which lowers oil and commodities prices, which takes pressure off the U.S. economy and shortens our recovery period. I know you have a hard time thinking these things through, but just try.

LICComment, that is definitely a possible scenario.

The part that I don't agree with is: "leads the ECB to lower rates, which strengthens the dollar".

That is assuming that the US economy doesn't sink any further, because if it does, the Fed will have to lower rates in tandem which means that the ECB lowering rates does not necessarily translate into a strengthening dollar.

Moreover, since Tricky Trichet just raised rates, switching bias to a dovish stance is probably not going to happen soon.

But that's just my opinion.

Also, the Fed IS running out of bullets, so something to keep in mind. They can't keep lowering forever, although they will be tempted to as were the Japanese in the 80s- they took the bait and lowered to practically 0, and we all know what happened there.

The only problem is LIc that they are all WHAT IFS. What's happening now is fact and is impossible to stop. It must clear put it's system and only then can we move on.

the fed spent all its bullets long ago -- the recoveries from slumps and the silver linings in rainclouds won't come from the fed -- who would have thought the "digital revolution" would happen? -- here's a radical thought: American food has been replaced by cheaper imported food (i.e. Chile) -- now the economics of importing/exporting are changing -- what has not changed is the huge supply of fertile farmland in the US, and to the north of us is a country with a vast supply of fresh water -- bad times never last forever

"the fed spent all its bullets long ago..."

The Fed still has 8 bullets. The rate is currently at 2%. Under Greenspna, it was 1%. And in Japan, their rate is 0.5%.

that's true, but some people have argued (not here) that what the fed does has stopped having the desired effect on interest rates - I want to say Paul Krugman, but I think it's some other columnist - I think people hang too much on the actions of the fed

Given the inflationary disposition of "helicopter ben," and the fact the he was a major influence in making Greenspan cut to 1% during the DotBust when he was still only a Fed Governor, there is a high probability that he will use more of the remaining bullets left in his salvo.

Coupled with the fact that employment has shrunk for 6 straight months (over half a million lost jobs) now with no signs of letting up, the odds are remain high for further cuts.

Most importantly, unlike 'people,' the currency markets have direct ties to Central Banks and their interest rate policies as arbitrage opportunities have created large currency carry trade markets including the yen and the franc.

Ireland's economy is nowhere near "on the verge of collapse". I emigrated from Ireland to the US in 1993. At that time, the unemployment rate was 18%. 5.4% is a drop in the ocean.

Recession is one thing, but a complete economic meltdown is science fiction. Get a grip.

Texaninnewyork99- I have to laugh. If you agree that Ireland is in or headed into a recession I have only one question. What comes before a collapse if not a recession? The housing crisis is just as bad in Ireland as it is in the US and will suffer the same faith. People over there were putting nothing down in most cases and even borrowing 110% to furnish the place. The construction trade has been cut in half and getting worse by the day.

LICComment- And I live in fantasy land. They just raised rates and have said plain as day that their major concern is inflation. So no I don't see anyway your scenario happens.

You guys/gals are just relying to much on the FED. They have done everything they can and quit frankly a lot more they should have. The market will only improve when everyone stops trying to fix it. That's what markets do. The ECB, FED, Politicians........ should just leave it alone and the strong will survive and we will be left with is a strong and health market that will begin to recover in the manner in which it's designed to do. Every-time some jerk-off decides that it's their job to get involved delays the recovery. Can you imagine that the FED President is asking banks to forgive loans. This is insane. Where is the punishment. By giving people and corporations an out it allows them to take even further risk in the future and weakens the market. Its actually comical that free market individuals (mostly republicans) get out raged at increased taxes and welfare programs. However when it's corporate welfare it's OK. You can't make this stuff up.

dco - I have only one quibble -- massive homelessness and empty buildings being used for shady purposes is not something we want -- I don't mean NYC, but in those areas devastated by massive foreclosure activity -- I do think this R/E bubble was partly a result of the post 9/11/01 rate cutting panic

lowery- I don't want any of the social problems that accompany massive foreclosures in areas, however this problem is going to occur no matter what we do. The problem is that all this interference is delaying the recovery. Everyone has their hand out and it results in stupid, idiotic and meaningless programs to satisfy some people at the expense of others and prevents the markets from emerging stronger and faster. Congress will not be satisfied until it destroys free markets.

dco - I guess I'm on the other side from you on that - I'm not so impressed with the magic of free markets, but that's another subject - yes, things have gotten really screwed up - I believe that the job-creating, growth-creating really inspired entrepreneurial spirit in US is the flip side of the near-sighted coin, i.e. we live on in the now and very recent past - lots of things we can criticize about it, but it's also the source of our resilience - little arrow pointing down is not going to go as far as some of us say, and when most people see only that little down arrow they are missing all the good things going on - this city is not within light years of the bad old days we've been through since the '70s - could get worse and would still be better than it was in 1979 - take care and try to smell the flowers a bit

for OP...

http://www.urbandigs.com/2008/02/global_decoupling.html

FEB 13th..by Jeff Bernstein:

"Spain - Residential Property Bubble Extraordinaire

According to a quote by David Owen of investment bank Dresdner Kleinwort, cited in the blog Seeking Alpha, "Spain could face serious difficulties this year as the excesses of a decade-long boom finally catch up with the country. The size of the Spanish corporate sector's financial sector is truly really scary. It rose to 14.5% of GDP in the third quarter of 2007 from 10% in the first quarter. This must be a record for a relatively large economy. Clearly this is not sustainable. Cost imbalances have a nasty habit of unwinding quickly and very painfully." The article goes on to note that Spanish direct investment in residential construction (ex mortgages and other related businesses) is 18% of the economy versus 6% in the U.S. Diana Choyleva, an economist at Lombard Street Research in London, is quoted as saying "Spain is like the U.S, on speed when it comes to the housing market. It is highly likely there will be falls in nominal prices." It also cites Moody's as saying that Spanish loan delinquencies may rise 15 fold by the end of 2008 due to increasing interest rates. "

Wait, so the Irish Carpenters aren't going to save the NYC RE market after all?

dco, you seem to post a lot of irrelevant titles

Maybe this title from the NY Times should be your next post

A Ban on Cockfighting, but the Tradition Lives On

ootin- Perhaps most post are beyond your understanding. Don't feel bad. Most people who still believe this is a good time to buy have the same difficulty understanding my posts as well. It has mostly to do with the fact that they bought at the height of the market or make their living selling people overvalued properties. Which are you Broker or Remorseful buyer?

ootin, dco's post in this case is very relevant.

Clearly, your example of "A Ban on Cockfighting, but the Tradition Lives On" comment is unwarranted and in poor taste.

Especially when there have been articles documenting the influx of foreign buyers and how their activities have propped up Manhattan real estate.

For example, the Irish:

http://www.nytimes.com/2007/05/08/realestate/08irish.html?fta=y&pagewanted=all

There are many, many more involving the Brits, Spanish, and others.

Please do some research before posting that kind of nonsense.

Dco - correct me if I am wrong, but generally what occurs after a recession (at least according to basic historical analysis) is recovery, and not collapse. Most new housing developments in Ireland have stopped. A lot of new apartments are left idle, or being rented. The concept is to wait for the demand to meet supply.

MMAfia, that NYTimes article is over a year old. The dogs on the streets know that the RE market, both in Ireland as well as in the US has softened.
My wife and I fully expect to buy in manhattan and make this our home. And, we will do so with full confidence. If the value of our property decreases by a small amount, over the short term, big deal.

Texaninnewyork99, yes, it's an article that was probably around the peak, illustrating what some of the forces were for the massive appreciation.

That, by definition, makes dco's post very relevant.

As far as your opinion that:

"My wife and I fully expect to buy in manhattan and make this our home. And, we will do so with full confidence. If the value of our property decreases by a small amount, over the short term, big deal."

more power to you.

The purpose of my post was to correct ootin, who was clearly wrong in this case.

MMAfia- Thank you. Those who have been posting for several months know the history of some arguments and continue to either support or rebut such claims. You of course are knowledgeable of the history and for that I Thank You. Another purpose of my post was to illustrate this as a world problem as well. This is a global financial disaster that in my opinion has never been seen. Trillions of dollars (insane amounts of wealth) have disappeared almost overnight. To think that this is just some normal downturn is ludacris. To compare this to the crash of 87', dot com era, 9-11, or the 70's is insane. This has nothing at all to do with any of those factors. We are intimately involved with world markets and no matter what our FED does it can't stop the locomotive from running away. So when people act as if posting problems in Ireland or Spain have no significance and go even further as to compare such information to "cock fighting" shows just how oblivious their view of the problems are.

MMAfia, dco's post has no relevance to anything, but "unwarranted and in poor taste"? How's this for poor taste - you're a pussy.

I am neither a broker or remorseful in any way. And just to prove I'm not remorseful, one more time let me say you're a pussy.

"... you're a pussy."

Thanks for proving my point ootin.

ootin- No reason to use that kind of language. So when did you buy?

What does this have to do with anything? If Europe was collapsing, why is its currency so superior to the U.S. Dollar?

How can you say that Ireland and Spain are declining as a cause for US or NYC real estate to drop when the evidence of Europe's current economically superior situation would either indicate support for NYC real estate or indifference, but certainly no negative?

What is the agenda of some of you guys?

Those guys are like Tweedle Dumb and Tweedle Dumber.

dco and MMAfia

Obviously, you haven't been reading this thread:

http://www.nytimes.com/2007/05/08/realestate/08irish.html?fta=y&pagewanted=all

Clearly, foreign influx of condo demand played a role in driving prices up last year at the peak.

Now that the local Irish and Spanish economies are hurting, it's not difficult to understand why the Manhattan real estate demand curve will have downward pressure.

And that's WITHOUT baking currency analysis into the equation.

Putting these two simple facts together is not rocket science.

Now, read the OPs link:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aKsb7ZbuHM00&refer=home

So, I ask, exactly what is so difficult to understand here?

And please, try to keep the conversation somewhat intellectual without resorting to name calling like "pussy" or "Tweedle Dumb and Tweedle Dumber".

MMAfia- I can't understand how people find this is difficult. How are you people unable to connect the dots. Europeans over the years bought Manhattan RE. as second homes. They treated Manhattan as a vacation destination much like Manhattites look at the Hampton's. They purchased these condos as vacation homes and investments. Now that they are starting to face the same problems at home, how long do you think it will be before they start to realize that having a vacation home 3,000 miles away is not such a great idea since they are facing tough financial times at home. With prices and rents dropping the investment part doesn't make sense after all now does it. WOW I still can't believe that people have a hard time understanding the process of how markets unravel.

ok, Spain and Ireland.

What about these European countries:
Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Italy
Latvia
Lithuania
Luxemborg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Sweden
United Kingdom
Croatia
Macedonia
Turkey
Albania
Andorra
Armenia
Azerbaijan
Belarus
Bosnia and Herzegovenia
Georgia
Lichtenstein
Moldovia
Monaco
Montenegro
Norway
Russia
San Marino
Serbia
Switzerland
Ukraine
Vatican City State

How are those economies doing and how will their economies impact NYC real estate?

You did a good job on 2, how about the other 46 countries?

You are missing the point.

The point is, the OP posted a link specifically talking about Spain and Ireland, and then ootin commented that it had absolutely nothing to do with Manhattan RE.

Which, as we have clearly shown is incorrect.

Vatican City State, Luxembourg? Lichtenstein? Surely, you are kidding right?

If Spain and Ireland have something to do with Manhattan RE, shouldn't the OP complete the thought and talk about all of the other countries that have something to do with Manhattan real estate, like the other 46 in Europe and the many many others in Africa, Asia, the Americas, Australia, etc?

What is the point of posting about just two foreign countries.

That's like telling weekend commuters that the A is running local to 207th, and assuming the rest of the trains the rest of the week are similar.

pizzaaok, if the OP had posted about Africa, the Vatican City State, Luxembourg or Lichtenstein, you would have a very valid point.

However, Spain and Ireland are not in the same class when it comes to Manhattan RE. Many condos in Manhattan were purchased as second homes or investments by people in those two countries, as per the NY Times article I posted from 2007.

See the difference?

dco, you constantly make unintelligent, out-of-context ridiculous statements on this blog. Why would anyone listen to you?

oh I see, the two very specific countries you picked are the only two countries that are relevant, and other countries are irrelevant because you didn't find an article about them.

LICComment- The same reason you just responded.

I'm not sure if MMAfia and dco are twin brothers or boyfriends.

or both

No pizzaok, the realtors are the ones who say this- not me.

For example:

http://www.iht.com/articles/2007/12/19/business/condo.php

We're seeing," she said, "a flurry of foreign activity from Britain, France and Italy, looking to spend their pounds and euros."

"These buyers are helping shield Manhattan from the housing slowdown that has plagued the rest of the United States and are providing a ready market for thousands of new condominiums."

Where's Africa, the Vatican City State, Luxembourg or Lichtenstein or any of the other countries if they were making such a great impact?

ootin,

since you got called out and pwned on this thread, so i will take your "wanna-be" spunky stabs and acknowledge them as somewhat amusing in respect for spunky.

lots of code words on this site, I think that is unfortunate. What is pwned and spunky?

sorry limmud,

pwned=owned

spunky is a long-time poster here

Re Spain: Recall they've elected and re-elected a far left socialist regime. Re Ireland, there's been a dearth of IPOs and Ireland exchange had been the go to spot for the last few years.

The lending crisis bubble was created by the Republican Administration to make it appear that its economic policies were actually working.

The only reason that the market saw a lift under Bush and employment numbers looked ok (even though it was actually a massive shift to lower earning service jobs) is that rates were lowered and lending practices deregulated.

The spending caused by the above made it appear that the republican economic policies were working but it was a complete shim sham.

8 years wasted America has nothing to show for those years. Our treasury is drained, the people are foreclosed and bankrupted and we are losing 2 wars. However, oil companies and defense contractors have never been richer.

Thanks for the extreme left-wing socialist view of things Landlord.

oh LIC then who's fault is this disasterous economy?

Are you going to blame Clinton or the guys who actually came up with and instituted these disasterous policies.

Please explain to us who's fault is it?

What is so disasterous Landlord? You really just spew the left-wing rhetoric without knowing what you are talking about, don't you? We are in a slow growth economic cycle which may or may not turn recessionary, and the housing market is slumping because it had recently been overinflated. The financial sector is significantly affected, but other sectors in the economy are very strong. The economy still has not had negative growth, and employment levels are still at historically low levels. This is what happens in free market economies, they go through cycles. If you think the Democrats will be able to tax and spend our way into prosperity, you are a fool. Stop being such a biased political hack.

ain't got nuttin' to do with which political party's in power

R/E goes in cycles - people build because prices are rising - eventually build too much

we've been here before in NYC, and we aren't anywhere near close to the bad times there have been -- this might get as ugly as prior ugly times, but it's always the same.... booms followed by busts

"The spending caused by the above made it appear that the republican economic policies were working but it was a complete shim sham."

Thank you Keith Olbermann.

"The only reason that the market saw a lift under Bush and employment numbers looked ok (even though it was actually a massive shift to lower earning service jobs) is that rates were lowered and lending practices deregulated."

Umm, actually, the level of antipredatory lending statutes was actually ratcheted up during the "Bush" Years. Of course, that got us nowhere. You cannot regulate "stupid". Someone plunks down $1000 on a $500,000 property, they deserve what they get.

actually, the globalization rage was extolled by advocates Bill Clinton and Ron Brown

What a stupid discussion.
Someone posts about two countries - Spain and Ireland, and then someone else defends that by talking about 3 other European countries Britain, France and Italy.

Obviously Sneaky Pete from Curbed is here too as Your Landlord. One of the most perplexing characters, extolls hard work but makes fun of the working class, hates Republicans and lower taxes but wants to buy buildings and kick out the rent control tenants.