Daily Digest 6/19 - Spain's Mortgage Crisis Lingers, Student Loan Debt Has Doubled
Spain's real estate crisis continues to rankle as bad bank loans skyrocketed in April. Although institutions are dumping their toxic assets into bad banks, defaulting customers might force them into higher bailout debt.
The total from dubious loans held by Spanish banks rose to 167.1 billion euros ($222.9 billion) in April from 162.3 billion euros in March, according to figures released by the Bank of Spain on Tuesday.
Ximo Puig, the head of the Socialist opposition in Valencia, says the station is likely to become yet another white elephant in a country where dozens of airports, train stations, motorways or cultural centres built during a decade-long property boom are under-used or have been abandoned.
Most European allies are "hollowing out" their armies as they slash Defense spending, casting doubt on whether Europe can remain a viable military partner of the United States, the outgoing U.S. ambassador to NATO said on Monday.
Many Western European countries have slashed Defense spending in response to austerity induced by the 2008 financial crisis and the United States now accounts for nearly three-quarters of total NATO Defense spending, Ivo Daalder said.
Sales of silver coins by the U.S. Mint are heading for the best start to a year since at least 1986 as prices slumped.
Sales in 2013 have reached 24.03 million ounces, according to data on the mint’s website. That’s the highest for the first six months of a year since records begin. Demand reached a monthly all-time high of 7.5 million ounces in January.
The concern about a credit crunch comes at a time when Chinese officials also are trying to combat the opposite: a credit binge that dates from the stimulus spending of 2009. The two are linked, analysts say. By trying to rein in the long-term credit surge, the PBOC may have produced a short-term credit crunch.
Smaller Spanish business loans - defined as loans under 1 million euros - have fallen steeply. Last year banks made 139 billion euros of such loans, half of what they lent in 2008, and the trend has continued in the year to date.
Banks say demand has fallen for loans during a brutal recession which has pushed bankruptcies up to record levels. But the fall in demand is coupled with a reluctance among banks to expose themselves to more loan defaults.
Last week, the Santa Cruz congress passed a bill slapping a 1% annual tax on mine resources in the province as the local government struggles with a wide spending deficit.
While the percentage seems small, it will cost mining companies in the province $100 million in new taxes next year, said an executive from one of the province's leading mines who requested anonymity. In effect, the tax amounts to about 8% of the total resources of a mine with a 15-year life, considering that it must be paid annually, he said.
There are at least 700,000 empty homes in Andalucia, according to the regional government.
"We were paying 225 euros a month, which is the cheapest rent you can find. But since I'm not earning and neither is my partner, they were going to throw us out" of our previous home, says Toni.
"We saw all the doors open here and realised there was no one in the houses. These houses were just going to fall to pieces," she says. "So we moved in."
Recent government data has shown that unemployment in Germany climbed by 21,000 in May – four times more than economists forecast. At the end of May, the Federal Labor Office published unemployment statistics showing that 2.96 million Germans (3 percent of the country’s population) are currently jobless.
This, combined with mounting economic problems, has forced some Germans to look for career opportunities elsewhere, with Switzerland, the US, Australia and Canada among the top destinations.
Student loan debt has nearly doubled in the past five years, according to a congressional report released Tuesday, less than two weeks before interest rates on federally backed student loans are set to jump to 6.8% from 3.4%.
New car sales across Europe fell to their lowest level in two decades for May as the deepening recession hurt demand.
Registrations dropped 5.9% to 1.04m in May, compared to a year ago, according to the industry body, the ACEA.
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