Sunday, 17 May 2009

The pain in Spain... the FT says, will be felt mostly by the banksWhat is interesting about this is how vintage insensitive it is. In the US, there is a world of difference between the 2005s and the 2007s: in Spain, not so much.

Update. Downgrades loom for the Spanish banks as an interest diversion test is tripped on a Caja Madrid RMBS.

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Blogger Charles Butler said...


The similarity from 2005 onwards is not that strange. Any hysteria-weighted index would probably put the market peak there. In practice, it probably means that was the year that lenders started seriously ignoring repayment risk in order to keep the cartel afloat.

Gives us a good idea of how long a process adjustment is.

1:39 pm  
Blogger David Murphy said...

What is interesting, though Charles, is that it seems that house prices have fallen far enough that the cushion of equity 2005 home buyers had from 2 or 3 years worth of appreciation has gone, even at 80% original LTV, making the 2005s pretty much as bad as the 2008s. Have things really gone off that much in Spain? Perhaps in the worst affected areas they have?

7:27 pm  

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