Ok, so I'm no expert in the economy sector. But who isn't aware of the world's economical situation at this very moment in time? I know that like the US and the UK and a huge part of the world, Spain has been spiralling down this economic crisis/credit crunch/recession or whatever you want to call it and it's not about to get any better any time soon.
Yes, we all know that it all started with the banks lending cash they borrowed from bigger banks. But people couldn't pay back the loans due to rises in fuel etc impacting on their lives and the banks couldn't pay back the bigger banks. So the big banks got worried and reduced lending thus creating the crunch.
At practically the very same time, the oil price rocketed and the massive increase in food prices, mostly due to high demand from China and India, also added to this crisis, and basically it's annoying.
More than half the Spanish population work hard for a good salary and a decent standard of living. Many people, myself being one of them, don't use credit cards or have a loan (mortgage aside). People living on credit have the same standard as living as me and now we have to suffer partly because of them. Bankrupcies, closing down sales, businesses going bust and, of course, redundancies are all results of the crisis.
Just like the UK, Spain is highly exposed to its failing property market and if I were to look into selling my 3 bedroom apartment in Palma de Mallorca only 16 month after I bought it, I would be looking at about a 50,000 euro drop in value. It's unbelievable, but the big question everyone is asking is, when will it all come to an end?
Well, in the US and UK, which seems to be where it all stemmed from, they're talking about "borrrowing and spending their way out of recession", and other good effects have been the falling oil prices, as the demand drops, and a rise in gold. (Does this sounds like Roman times or what?)
In Spain, on the other hand, it only seems like bad news I'm afraid. There is the ever-growing need to correct the bank's current account deficit and the main reason for the deterioration in the income account lies in the growing external indebtedness of the Spanish economy .
It seems clear that conditions will continue to worsen all through 2009 and probably shrink again in 2010. Oh blow, there goes my trip to Thailand out the window! As which middle class citizen on an average salary and an ever-rising mortgage to pay can permit themselves these little luxuries whilst the crisis is still a big part of our lives? But then again, as I step out into Palma on what I thought would be a quiet Thursday morning, all I can see around me are men, women, children, tourists and even the elderly racing from shop to shop, crossing high street to high street, their arms weighed down with 'El Corte Ingles', 'Zara', 'Sfera' shopping bags. Fair enough, the word 'Rebajas' (sales) is scrawled across most of them, but still, if we were caught up in such a scary credit crunch, then why do we just continue to buy and shop and spend? Who knows? But my very wise father tells me, we've come out a recession once before and we'll do it again. Eventually.
Yes, we all know that it all started with the banks lending cash they borrowed from bigger banks. But people couldn't pay back the loans due to rises in fuel etc impacting on their lives and the banks couldn't pay back the bigger banks. So the big banks got worried and reduced lending thus creating the crunch.
At practically the very same time, the oil price rocketed and the massive increase in food prices, mostly due to high demand from China and India, also added to this crisis, and basically it's annoying.
More than half the Spanish population work hard for a good salary and a decent standard of living. Many people, myself being one of them, don't use credit cards or have a loan (mortgage aside). People living on credit have the same standard as living as me and now we have to suffer partly because of them. Bankrupcies, closing down sales, businesses going bust and, of course, redundancies are all results of the crisis.
Just like the UK, Spain is highly exposed to its failing property market and if I were to look into selling my 3 bedroom apartment in Palma de Mallorca only 16 month after I bought it, I would be looking at about a 50,000 euro drop in value. It's unbelievable, but the big question everyone is asking is, when will it all come to an end?
Well, in the US and UK, which seems to be where it all stemmed from, they're talking about "borrrowing and spending their way out of recession", and other good effects have been the falling oil prices, as the demand drops, and a rise in gold. (Does this sounds like Roman times or what?)
In Spain, on the other hand, it only seems like bad news I'm afraid. There is the ever-growing need to correct the bank's current account deficit and the main reason for the deterioration in the income account lies in the growing external indebtedness of the Spanish economy .
It seems clear that conditions will continue to worsen all through 2009 and probably shrink again in 2010. Oh blow, there goes my trip to Thailand out the window! As which middle class citizen on an average salary and an ever-rising mortgage to pay can permit themselves these little luxuries whilst the crisis is still a big part of our lives? But then again, as I step out into Palma on what I thought would be a quiet Thursday morning, all I can see around me are men, women, children, tourists and even the elderly racing from shop to shop, crossing high street to high street, their arms weighed down with 'El Corte Ingles', 'Zara', 'Sfera' shopping bags. Fair enough, the word 'Rebajas' (sales) is scrawled across most of them, but still, if we were caught up in such a scary credit crunch, then why do we just continue to buy and shop and spend? Who knows? But my very wise father tells me, we've come out a recession once before and we'll do it again. Eventually.
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