Sunday, July 20, 2008

¿Cuál es el riesgo de una severa recesión económica en España?

Edward Hugh ha publicado de nuevo un interesante análisis de la situación económica española.El mismo se refiere tanto a las causas económicas (ver gráficos) como a la evaluación cuantitativa del problema (un 50% del PIB anual de España en activos inmobiliarios (incluido el suelo) y en financiación con dicha garantía (cédulas hipotecarias) que debe renovarse y sustituirse).La magnitud del problema y la financiación necesaria para abordarlo es de una seriedad alarmante.Para empezar, porque como el autor señala, y no podía ser de otra forma, uno de los sectores más severamente afectados es el sector financiero español.

El análisis también incluye cinco propuestas que destacan por su radicalidad y severidad y que seguramente merecerán críticas y propuestas alternativas.Pero como él ha dicho, nadie ha propuesto hasta la fecha nada.

Como el Presidente del Gobierno ha encargado a un equipo de expertos un diagnóstico económico, y como uno no suele leer en la prensa en español contribuciones de este tipo, quizás la primera pregunta debería ser qué funciona tan mal en nuestro país para que los organismos e instituciones con competencias en este área no hayan expresado ninguna alarma durante el período de prolongado milagro económico contruido sobre desquilibrios más que evidentes, que ahora llaman a la puerta de la realidad con una furia inusitada y provocando el desconcierto.

Para el trabajo pendiente, no estará de más un poco de mentalidad analítica, aunque esté expresada en el inglés de quien sí se toma la molestia de comprobar las cosas por sí mismo:

"The big question for our current concerns is who is exposed to the risk on all this, and the answer to that question is a lot simpler: Spain's already cash-strapped banking system.

One common estimate of the exposure of the banks to the builders would be somthing of the order of 300 billion euros - this is the opinion of Spanish analyst Inigo Vega at Iberian Securities (and it is one I more or less share). So we could say we have something in the region of 20% to 25% (or more) of Spanish annual GDP in play here.

Bank Exposure Through Mortgage Backed Securites

To this second order exposure of the banking system to the construction sector alone (and remember, through the negative impact of all this on the real economy, we should never lose sight of those non-construction corporates, you remember, the ones who had all that indebtedness we saw in the first chart) we need to add the exposure of the banks to the cedulas hipotecarias, which alone run to something in the 250 to 300 billion euro range (to which we need to add, of course, other classes of more conventional mortgage backed-securities ). If we add these two together - the builders and the cedulas - then we are obviously talking about a potential injection into something of over half of one years GDP in Spain.

According to Celine Choulet of PNB Paribas mortgage-backed securities in the broader sense of the term (ie including cedulas and MBS) now add up to around 37% of outstanding mortgage loans in Spain. She also estimates that asset backed securities held by non-residents may amount to as much as 81% of the total securities issued.

Outstanding home loans (for purchases and refis) represent a substantial percentage of the Spanish banking institutions’ balance sheets (21.5% of total assets and 35.6% of total loans to the non-financial private sector in the second quarter of 2007). In the second quarter of 2007, outstanding home loans amounted to 589 billion euros, 56.4% of which were distributed by cajas (29.8% of their assets), 37.2% by commercial banks (15.4%) and 6.4% by mutual institutions (30.9%).

If we add together home loans and the financing of real estate sector (construction and property services), the overall exposure of Spanish credit institutions has increased significantly over the last decade (37% of assets in the second quarter of 2007, 61.5% of total loans to the non-financial private sector). Exposure of Spanish banks to the real estate sector has exceeded, both in level and in growth rate, that of US, Japanese and British banks. In total, in the second quarter of 2007, cajas (49.7% of assets, 70.5% of loans) and mutual institutions (46% and 56.3% respectively) were almost twice as exposed as commercial banks (28% and 55.2% respectively).

According to Choulet - and just to take one example - in 2006 total new funding to the Spanish mortgage market reached 201.3 billion euros, of which 88.3 billion took the form of covered bonds (representing 43.9% of the total of mortgage securities market) and 113 billion was in mortgage-backed securities (56.1%).

And remember the cedulas all need to be "rolled over" in the next few years (with a big chunk coming up between now and 2012). And the problem starts this autumn. According to an article in the Spanish daily El Pais at the end of June the Spanish banking sector needs to raise 62 billion Euros before the end of this year just to rollover what they have coming up on the immediate horizon.

So what does all this add up to? Well, to do some simple rule of thumb arithmetic, just to soak up the builders debts and handle the cedulas mess, we are talking of quantities in the region of 500 to 600 billion euros, or more than half of one years Spanish GDP. Of course, not every builder is going to go bust, and not every cedula cannot be refinanced, but the weight of all this on the Spanish banking system is going to be enormous. Banco Popular is the most visible sign of the pressure, and their shares have already dropped by 44% this year, and by 7.9% on Tuesday alone (they were the listed bank which was most exposed to Mrtinsa Fadesa).

So it is either inject a lot of money now - more than Spain itslelf can afford alone - or have several percentage points of GDP contraction over several years and very large price deflation - ie a rather big slump - in my very humble opinion.

And it is just at this point that we hit a major structural, and hitherto I think, unforeseen problem in the eurosystem (although Marty Feldstein was scratching around in the right area from the start). The question really we need an answer to is this one: if there is to be a massive cash injection into Spain's economy, who is going to do the injecting? Spain alone will surely simply crumble under the weight, and it is evident that the problem has arisen not as the result of bad decisions on the part of the Spanish government, but as a result of institutional policies administered in Brussels and monetary policy formulated over at the ECB. And yet, the Commission and the ECB are not the United States Treasury and the Federal Reserve, no amount of talk about European countries being similar to Florida and Nebraska is going to get us out of this one: and it is going to be step up to the plate and put your money where your mouth is time soon enough. Yet, cor blimey, we are still busying ourselves arguing about the small print on the Lisbon Treaty.


Basically the future of all these migrants is now deeply uncertain. I would even say that losing the migrants constitutes the most important of all the downside risks to the Spanish economic crisis for the impact it will have on urban rents and mortgage delinquency in the short term (since many of the migrants have bought flats), and for the consequences for Spain's housing market and pensions system in the mid term. Evidently, since most of the migrants are economic migrants the inward flow must surely be about to dry up (since there are few if any jobs for them) and thus our attention should be focused on the need to hold onto those we already have.

Is There A Rescue Plan Available?

Basically, and on the basis of all the above, I would like to now put forward a five point "rescue" plan for the Spanish economy. It would look something like this:

1/ Set up a national land agency, to buy up land and to irrevocably convert it to other uses (agriculture wouldn't be a bad bet where possible given present food prices). This to include the proviso that such land could never again be zoned.

2/ Buy out and close down the bankrupt builders as part of a general restructuring programme such as the one which was developed for the shipyards and the mines.

3/ Buy up and burn immediately ALL outstanding cedulas hipotecarias. Well, I'm exaggerating here, but something very decisive needs to be done to take these things out of circulation in the longer term, or we will never ease Spain out from under this.

4/ Establish a programme to help immigrants in difficult circumstances, and offer training etc to prepare for the future. A basic focus of policy needs to be on trying to persuade migrants to stay.

5/ Restructure all existing mortgage contracts - which will involve every one paying more - in order to put mortgage financing in Spain back on a sound footing. This will obviously require legislative intervention, and will equally obviously involve breaking the direct tie with one year euribor. It has been following euribor up and down which has gotten the Spanish mortgage market into this mess in the first place."

Estas son las fuentes.Por cierto, entre las mejores en lo que se refiere a otros países y a la situación mundial:

1 comment:


No me cabe duda alguna de que en España ya hemos entrado en una clara recesión económica.

Mas que de una crisis, habríamos hablar de cuatro crisis interrelacionadas o incluso cinco.
Dos externas: El precio del petróleo y la crisis financiera americana. Otras dos internas: El sector Inmobiliario y el precio de las materias primas que provoca la inflación.
Estos días ya se empieza a hablar de otra crisis mas: La del turismo que empieza a provocar tensiones.

El estado en seis meses ya se ha comido el superavit que teníamos, y por tanto se impone que de una vez por todas se reconozca el problema y que se empiecen a aplicar rigurosas medidas paliativas, aunque estas resulten impopulares o poco electoralistas.