Whenever I write about the California-centric origins of our economic crash, I get comments saying to the effect of, "Hey, what about Spain? They had a huge Housing Bubble in Spain, too. Spain is totally different from California, yet the same thing happened there."
I was at a charity event held at Cal Tech yesterday and I got talking to a Spaniard from Andalusia in sunny southern Spain. I asked him about the Housing Bubble and Bust in Spain. He said that immigrant retirees from Northern Europe with big pensions bought up all the good land near the coast, so the locals started buying up houses on the bad land in the inland deserts on the logic that, hey, it was Spain, Spain is a Mediterranean country, so anywhere in Spain must have a Mediterranean climate, so the price of houses must go up forever everywhere in Spain, no matter how hot and dusty.
I said, that sounds a lot like the Bubble and Bust in California's Inland Empire.
He said, Yes, very much so.
He went on to say that Spaniards can deal with hard times better than Americans can. So much of the economy is off the books in Spain in good times or bad that you can always get by by moving in with your relatives and doing unreported odd jobs for your uncle or cousin-in-law, even if you are officially broke. American nuclear families aren't as resilient, he felt.
P.S., I don't know very much about the Florida Housing Bubble. Was there a big Northern Baby Boomer retiree aspect to what happened in Florida? (There wasn't in California, as far as I can tell -- only the rich retire to California anymore. The Arizona and Nevada Bubbles were driven by the California Bubble, with Californians cashing in their expensive houses and buying cheaper, but unfortunately still overpriced ones, in the inland desert states. Some of those Californians moving inland were retirees.)
Perhaps the Spanish Bubble was like a cross between the California and Florida Bubbles.
I was at a charity event held at Cal Tech yesterday and I got talking to a Spaniard from Andalusia in sunny southern Spain. I asked him about the Housing Bubble and Bust in Spain. He said that immigrant retirees from Northern Europe with big pensions bought up all the good land near the coast, so the locals started buying up houses on the bad land in the inland deserts on the logic that, hey, it was Spain, Spain is a Mediterranean country, so anywhere in Spain must have a Mediterranean climate, so the price of houses must go up forever everywhere in Spain, no matter how hot and dusty.
I said, that sounds a lot like the Bubble and Bust in California's Inland Empire.
He said, Yes, very much so.
He went on to say that Spaniards can deal with hard times better than Americans can. So much of the economy is off the books in Spain in good times or bad that you can always get by by moving in with your relatives and doing unreported odd jobs for your uncle or cousin-in-law, even if you are officially broke. American nuclear families aren't as resilient, he felt.
P.S., I don't know very much about the Florida Housing Bubble. Was there a big Northern Baby Boomer retiree aspect to what happened in Florida? (There wasn't in California, as far as I can tell -- only the rich retire to California anymore. The Arizona and Nevada Bubbles were driven by the California Bubble, with Californians cashing in their expensive houses and buying cheaper, but unfortunately still overpriced ones, in the inland desert states. Some of those Californians moving inland were retirees.)
Perhaps the Spanish Bubble was like a cross between the California and Florida Bubbles.
My published articles are archived at iSteve.com -- Steve Sailer
Posts
30 comments:
Spain also had huge unchecked immigration from North Africa via the Canary Islands.
Steve Sailer: I got talking to a Spaniard
Ouch.
Steve, you're never gonna get asked to eat lunch at the Kool Kidz' table as long as you're using that old fuddy-duddy antiquated paleocon insensitve racist lingo.
Get with the times, dude.
PS: The housing market collapsed in Spain for the same reason that it collapsed in the USA - several decades ago, fertility rates tanked, and now there is [quite literally] no one remaining to whom the houses can be sold [the population implosion in Spain is so severe that they've taken to begging the Cubans to repatriate themselves]:
A Portrait of Europe's Aging PopulationOctober 9, 2007
businessweek.com...However, the decrease in numbers has been greatest in Spain, where the young population has diminished by 44% in the 1990 to 2005 period...Cubans line up to apply for Spanish citizenshipDecember 29, 2008
reuters.com...Hundreds of Cubans lined up outside the Spanish Embassy in Havana on Monday on the first day Spain began taking applications for Spanish citizenship under the country's "historic memory" law...SUBPRIME DEMOGRAPHYMark Steyn
April 21, 2009
steynonline.com...Between 1990 and 2000, the percentage of Spanish women childless at the age of 30 almost doubled, from just over 30 per cent to just shy of 60 per cent...For any market to exist, there must be both a supply and a demand of a thing [to form the basis for the very existence of the market], and there's just no way in Hades that you can wish away an oversupply of a thing in the absence of a demand for it.
Ain't. Gonna. Happen.
Welcome to the world of extinction-level fertility rates - ain't death grand?
PPS: A little off-topic, but, as regards the recent basketball thread, this makes it all the more remarkable that a vanishing little backwater principality like Spain could even stay within striking distance of the Krzyzewski-coached NBA All Stars at the 2008 Olympics.
Rules matter.
Judging by the Google rankings, The Spanish housing bubble is entering into the virtual territory belonging to a certain guy from Nazareth
Oops - forgot about the carriage return bug.
A Portrait of Europe's Aging Population
October 9, 2007
businessweek.com
...However, the decrease in numbers has been greatest in Spain, where the young population has diminished by 44% in the 1990 to 2005 period...
Cubans line up to apply for Spanish citizenship
December 29, 2008
reuters.com
...Hundreds of Cubans lined up outside the Spanish Embassy in Havana on Monday on the first day Spain began taking applications for Spanish citizenship under the country's "historic memory" law...
SUBPRIME DEMOGRAPHY
Mark Steyn
April 21, 2009
steynonline.com
...Between 1990 and 2000, the percentage of Spanish women childless at the age of 30 almost doubled, from just over 30 per cent to just shy of 60 per cent...
Another thing that Spain has in common with California is extensive use of Latin American immigrant labor during the construction boom.
Peter
"A little off-topic, but, as regards the recent basketball thread, this makes it all the more remarkable that a vanishing little backwater principality like Spain could even stay within striking distance of the Krzyzewski-coached NBA All Stars at the 2008 Olympics."
Why, Spain has a larger population than African-America doesn't it?
Has anyone seen any estimates of 1) the total losses and 2) the total unexpected losses, on the Spanish-Irish-London-Romanian housing bubbles, versus the American housing bubble? It seems to me that the US housing bubble could crater the world economy, while the others could not, due to 1) scale, and 2) the fact that the US was supposed to have a mature housing and housing finance market, where valuations and credit standards were supposed to be more reliable, in contrast to real estate markets in less mature economies.
Meanwhile, The Washington Post has a story indicating that the banks' financial condition is not as bad as feared and may result in losses less than the funds already provided, while Fannie and Freddie are headed for losses perhaps in the $2-trillion range, never to be repaid. Fannie and Freddie were precisely the institutions that dove deeply into the US junk housing debt market in 2005 and 2006, the years a manageable problem turned into a global catastrophe.
Steve, why do you allow Lucius Vorenus to post his tripe on basketball and "rulebooks" and not give others the allowance to rebut him in the type of language he understands?
"Was there a big Northern Baby Boomer retiree aspect to what happened in Florida?"
A ton of northerners sold their homes and moved to Florida where the housing was cheap. A ton of wealthy South Americans also purchased homes in Miami-Dade. All of that aside, easy money from the Fed is more the culprit. It was just insanely easy for $10/hour workers to get $300,000 mortgages.
Argentine friends of mine say something similar happens there whenever the economy collapses, which it does every couple of years. Folks move in with relatives and work on the large black market. They still have strong families. And after Peron wrecked the economy decades ago, nobody much expects prosperity to last long.
OT, but I notice that today's most popular article in the NY Times electronic edition is a travel article about Portland. It seems to me that every couple of months the Times does a story on the indefinable, ambient, eclectic, alternative something or other about Portland, and I'm not going looking for these articles; I'm just referring to the ones that, if you visit the Time's website, you can't help but notice. I'm sure there have been plenty of others that never made it onto my radar screen.
So, what's the deal? Is Portland the new San Francisco, and if so, why should I care? Why is the Times focusing so intently on the ultimate SWPL city, that also just happens to be an almost entirely non-NAM city? Do Times readers secretly crave a West Coast habitat where they can indulge their sympathies for the world's downtrodden while being served omletes, muffins, and coffee by perky, 20 something blonde waitresses? Does Carlos Slim have investments in Portland?
Steve, why do you allow Lucius Vorenus to post his tripe on basketball and "rulebooks" and not give others the allowance to rebut him in the type of language he understands?I blame the nihilists.
Black Sea -- Yes. Nuff Said.
While Lucious Vorenus and I rarely agree, he is 100% correct on Spain's fertility rates. Fertility in a prosperous, relative freedom for women society is an age old one. Both Greece and Rome, which afforded their women better treatment than the other antiquity cultures, grappled with it.
It's pretty clear that having women be free or relatively free, good social positions generates a LOT of wealth, not the least of which is the most important job in the world, taking care of children, is done by loving mothers concerned about their kids. But it does have it's downside.
As far as the TOTAL losees in real estate, the absolute dollar amounts are MUCH larger for the Iceland/Ireland/UK/France/Germany/Spain/Italy bubbles. That's just by OFFICIAL stats, IIRC (sorry no cite offhand). There's considerable sentiment that Europe had even more speculation than America.
You have to recall (Steve is spot on about the Black Market off/books economy in Europe) that over-regulation leads to very few business opportunities. Flip that House was BIG in Europe, perhaps even bigger than here where entrepreneurial activities are easier.
He went on to say that Spaniards can deal with hard times better than Americans can. So much of the economy is off the books in Spain in good times or bad that you can always get by by moving in with your relatives and doing unreported odd jobs for your uncle or cousin-in-law, even if you are officially broke. American nuclear families aren't as resilient, he felt.Ah yes, the benefits of being Catholic. Well, at least I got my kids baptized, and I'll do my best for them when they need it.
I wonder what will happen to the black market economy in Spain when there are no more cousins or uncles to work for? With Total Fertility at about 1.3, we'll soon find out.
What happened in Spain was a perfect storm. Combine low interest rates with a shortage of housing and you get a bubble the size of Gibraltar.
True enough, part of the blame rests on Northern European retirees (there may be as many as 500, 000 German and British old geezers alone living in Spain) because they took part in the real State fever, along with many foreign investors/speculators.
But the boom was mostly fueled by youngish Spanish couples buying flats and houses at ridiculous prices, due to the shortage of housing in the cities.
And here's where immigration enters the picture. Starting around the year 2000, thousand of foreigners started pouring in, mostly Romanians and Ecuadorans. Rental prices went up to the point where buying a house was actually cheaper than renting in the big cities (Madrid, Valencia, Barcelona). As I said, young Spaniards started to leave the cities for the "suburbs" (actually, the small commuter towns that surround the large cities), looking for affordable accommodation (with low interest rates) and to escape the flow of foreigners fast making life miserable for them, through alienation and rising crime.
In turn, the boom made those foreigners necessary to build the new houses.
When interest rates went up, the party was over. Construction business went broke; immigrant - and Spanish- construction workers were no longer needed; and the banks started to feel the pain. For the banks were deeply involved in the bubble, with thousands of mortgages that turned out wrong and real state investments that went sour.
You can well say that it's the Spanish version of the sub-prime crisis, including fishy underwriting and a large number of foreclosures, with immigrants in the lead.
Well I'll be, Testing i haven't talked to you since i moved to Seattle. How are my old chums in boston. Are you still working at the post office? Hows Norm doing? its been so long.
How much of this is just the basic pattern of a housing bubble? It seems like an inevitable part of a housing bubble is the part at the end where people with little business buying a house manage to buy a terribly overpriced house someplace where hardly anyone would want one, except for the bubble-inflated prices. Bubbles run on the greater fool theory, and someone always has to be the last fool.
Florida's housing bubble was, like everywhere, very speculator driven. Everyone was trying to flip a few houses. There's also few other outlets for blue collar labor other than home construction. High housing values in other parts of country also drove it; as people sold their homes in NY or Ohio, they moved here, and had more to spend.
But look to the demographic aspect. It's worst in the Hispanic areas and, while we have relatively few Mexicans here, there has been a huge influx of Puerto Ricans from NY and the Island, particularly in the Osceola County are, which is the worst hit part of the Orlando metroplex.
Also, our human capital is low and wages are very stagnant compared to California. This wasn't so bad when a couple folks working at Disney could get a house for $80K in the exurbs and afford it on $15/hour. But at $300K, not so much.
The bubble was quite uneven, hitting hardest in areas with lots of Hispanics (Miami-Dade, OSceola, Deltona), entrepreneurial/speculating Jews and New Yorkers with beach property to play with (Ft. Myers, Ft. Lauderdale, West Palm), and tending to bypass more rural and settled areas like Tallahassee, Gainesville, and Lake City.
Okay, I realize this is kinduva tedious point to be making with a bunch of boneheads who still follow the [modern] NBA, but throwing out the rulebook is a form of nihilism.
Without rules, the game quickly becomes random and meaningless and purposeless.
[Which, by the way, is why no one watches the NBA anymore - or at least no one with an IQ above about 90.]
I guess it was the underclass blacks who caused the European housing crisis, huh?
- Straw Man
Truth:
Why, Spain has a larger population than African-America doesn't it?Yes, by a few million, something like 45 million to 40 million. That would mean that there are significantly more young black Americans than young Spaniards in Spain.
"Without rules, the game quickly becomes...meaningless and purposeless"
All games are meaningless and purposeless, that's why they're called "games" not "family" or "work."
"[Which, by the way, is why no one watches the NBA anymore...]
Yeah no one watches...except for the millions of people around the world who watch. Other than that, you're right sport.
Why are some of you emanating with pride because the Spanish basketball team, with probably the best squad it could muster, loss to an all-black U.S. team by eleven points in the title game and 37 points in qualifying play? Have you become that desperate? In my part of the world, no honor comes from double-digit losses.
Pardon my earlier mistake. "Loss" should have been "lost."
"That would mean that there are significantly more young black Americans than young Spaniards in Spain."
Is 22-34 (the optimal age for a basketball player) considered "young?"
"I guess it was the underclass blacks who caused the European housing crisis, huh?"
Don't be silly, of course not!
It was the Spanish bankers who re-wrote the rules for them sot that they could qualify for houses.
The Spanish housing bubble may have something, not everything, but something, to do with the country's low fertility. If you have to spend your life canoodling your significant other in the town square (or plaza because you still live with your folks at thirty because you cant afford a place, then kids are unlikely.
Truth:
A non-trivial number of mortgage defaulters were immigrants: particularly Hispanics (Ecuadorans and Colombians) and some Blacks.
"A non-trivial number" makes a rather highly trivial point of argument; sort of like "alot" or "many."
Post a Comment