With markets increasing pressure on Spain, Prime Minister José Luis Rodriguez Zapatero is running out of the political capital necessary to force through difficult reforms that could ease investor concerns, The Wall Street Journal reported. in the wake of Ireland's €67.5 billion ($88.7 billion) bailout, sovereign-debt concerns have risen in Spain and Portugal. Pressure is building on Mr.
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Spain faces a problem as empty homes left over from the housing boom go up for sale: determining just how much the properties are worth, The Wall Street Journal reported. Analysts, property-sales representatives and economists said data coming from the government and even some large appraisal companies understate the drop in real-estate prices. That is causing confusion and scaring off some investors who could help banks clear their backlog of homes. The discrepancies are owed, in part, to a quirk in how some Spanish home-price data are calculated.
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Spanish officials are mounting an aggressive campaign to dismiss fears that Europe's fiscal woes—which have already leapt from Greece to Ireland and may soon spread to Portugal—will reach their shores, The Wall Street Journal reported. This week, Spanish officials hastened to throw up a firewall around their country with a volley of positive comments about the progress of Spain's fiscal reforms and the soundness of its banking sector. The message they are emphasizing: Spain is not Ireland, which is on track for an estimated €80 billion ($109 billion) international bailout.
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Spain's timid economic recovery stalled in the third quarter as the result of government austerity measures, but should soon pick up again, the Bank of Spain said Friday, The Wall Street Journal reported. The Spanish central bank estimated in its monthly economic report that third-quarter gross domestic product was unchanged from the second quarter. Spanish GDP rose 0.2% in the second quarter and 0.1% in the first after six consecutive quarters of contraction. In annual terms, third-quarter GDP rose 0.2%, its first annual increase in eight quarters, the central bank said.
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Spanish jobless claims continued to spiral higher in October, highlighting a weak recovery for an economy suffering from the collapse of a decade-long construction boom and government efforts to slash a towering budget deficit, The Wall Street Journal reported. The Spanish Labor Ministry said Wednesday that registered jobless claims rose by 68,213, or 1.7%, to nearly 4.09 million in October from September. The ministry doesn't provide unemployment rates. The Spanish Statistics Institute said last week that the average jobless rate was 19.8% in the third quarter.
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For many Spaniards, no longer able to pay their mortgages, the fine print in the deals they agreed to years ago is catching up with them, the International Herald Tribune reported. Not only are Spanish mortgage holders personally liable for the full amount of the loan, but throw in penalty interest charges and tens of thousands of dollars in court fees, and people can end up facing a mountain of debt. Bankruptcy is not the answer, either. Mortgage debt is specifically excluded here.
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Spain's banks are selling valuable branches and seeking government help to find renters for foreclosed homes as they try to prop up their bottom lines amid continuing trauma in their deteriorating loan portfolios and other problems, The Wall Street Journal reported. With profit margins tumbling, Spanish banks of all sizes—from big Banco Bilbao Vizcaya Argentaria SA to smaller regional savings banks known as cajas—are taking such steps as they feel a squeeze from high funding costs and other ills.
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More than 50,000 Spanish solar entrepreneurs face financial disaster as policy makers contemplate cutting the price guarantees that attracted their investment in the first place, Bloomberg reported. Prime Minister Jose Luis Rodriguez Zapatero introduced the subsidies three years ago as part of an effort to cut his country’s dependence on fossil fuels. At the time, he promised that the investment in renewable energy would create manufacturing jobs and that Spain could sell its panels to nations seeking to reduce carbon emissions.
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Only months after two emergency rescues and a wrenching series of mergers among Spanish cajas de ahorros or savings banks, a second round of consolidation is being predicted by the country’s bankers, officials and financial analysts, the Financial Times reported. With Spain’s economy still stagnant after the global crisis and the collapse of the domestic housing bubble, commercial banks and unlisted cajas have been amassing unwanted real estate on their books, while bad loan ratios rise and the pie of profitable banking business continues to shrink.
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Across Spain, towns that once reaped the benefit of housing-boom revenues are slashing budgets, cutting services and racking up debt. Together, according to Spain's central bank, the country's 8,000 municipal governments owe companies some €13 billion ($18 billion), representing more than one-third of their €36 billion total debt, The Wall Street Journal reported. Economists say the situation is already suppressing Spain's economy and employment levels.
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