Jun 19

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Residential Real Estate is Not Just a US Problem!

I recently returned from several weeks in Spain. When I left the U.S. I was focused on our economic problems. Though I had read about Europe’s issues, I didn’t think that they could be as bad as ours. I was wrong!

When we arrived in Madrid the first thing I noticed on the ride from the airport was the large number of cranes. When I looked closer I discovered that some projects either had been abandoned or were moving extremely slow.

As we traveled on to Seville and Granada a similar pattern emerged. During a cab ride, I picked the brains of a Spaniard who spoke excellent English (since I can’t speak Spanish!). He confirmed that loose lending had resulted in numerous real estate projects being built. Furthermore, the rising fuel prices had put a dent in the locals purchasing power (gas is $8 – $9 per gallon in Spain). In fact, a week after we left Madrid the taxi drivers and then the truckers went on strike to protest the high taxes on fuel.

As we left Spain I had the feeling that this sub prime mess goes much deeper than the U.S. banking system. In addition, it might take much longer to work through the worlds economy.

Residential Real Estate

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