Buying in Lisbon

Part 2 of my reply to Pierre about buying a ruin in Lisbon

“We want to move to Lisbon permanently early 2013 and found several nice rentals.
But we also found an old house in Lisbon, on the border with Alfama. It needs very serious renovation (practically RECONSTRUCTION). But once done, we would have a T2 for ourselves, and 2 T1 for daily/weekly rental with great views (including the river). Total costs aprx. 250K. Would you consider this a risky investment?”

In part 1 of my reply I looked at the general economic outlook in Portugal. It is not good. However, let’s now look at the particular deal.

If this deal was anywhere else in Portugal I would say it was way too expensive. I must admit I dont know what house prices or rentals go for in Alfama. It certainly would appear to be a great spot overlooking the estuary. You really do need to check other prices in that area. A quarter of a million just for a ruin sounds crazy. Let me put it like this. I have a three bed apartment in London. It is close to several tube stations, and there is a massive amount of work available for good pay within walking distance. It is worth about the same amount.

Lisbon wages are not as high as London wages, so why is a ruin worth so much money? Something sounds not right here. I can in that area find for sale a property split into two apartments ready to move into for €150,000 (that’s half the price of your project) so unless the one you have your eye on has spectacular views from the top of the hill with courtyard and garden I have no idea why it costs so much.

A capital city should have a proper rental market, but you really do need to tramp around the streets and see what deals you can find, then get back and get out the spreadsheet and do your homework. Down here in the Algarve you’d have to be a total idiot to buy anything with a view to renting it out. You can rent a 1 bed apartment for €50 a week. For twice that you get something really nice. Lisbon should be much better, and at least Alfama is a hip place to be.

On the other hand, to put things into perspective, in this week’s Unique Members’ Bulletin there is a hotel in Cumbria going for £35,000. That is the price in a well known beauty spot in a wealthy country. You have a home and a business for a pittance. You cant get that kind of value in Portugal. Wages here are about €1,000 a month. That’s less than half what they are in the UK. House prices have to fall considerably in Portugal. They are still extortionately high.

I have been asked to look at Turkey and Sicily next. Let’s see what turns up.


Greece: After the Euro

I have been saying for some time that it is impossible to second guess the way the eurozone mess is going to go because of the continued idiotic interference of politicians. I have also said that the euro is a currency that survives purely on confidence. Well, I think we have just had a serious change in perceptions.

Confidence in Greece using the euro is evaporating fast. Once that mood gets enough traction it will be impossible to stop, and the country will be forced out of the eurozone simply because it will become a monetary wasteland.

Those of you who read the New York Times (probably not a lot) will have noticed some interesting articles recently about Greece, Italy and Spain.

The news is that large corporations in the US and other countries are preparing for a Greek exit from the euro. Several companies, including Visa, say they can cope with a Greek exit within 24 hours, and they have contingency plans for a new currency. It looks as though politicians are going to be side-lined on this issue at last.

The problem is one of confidence. All fiat currencies rely solely on confidence. Hard currencies are backed by something else, usually gold, maybe oil. Fiat currencies are backed by consensus. If you look at a euro note you would be hard put to work out what it really is, who printed it, who guarantees it, and what it’s supposed to be worth. It might have a 20 written on it, but what that 20 is worth is another matter.

The fact that more and more international companies are questioning Greece’s ability to survive within the eurozone (which is really so obvious only a politician cant see it) means that confidence is going. With that gone, the currency is effectively gone too. It’s no good a politician saying we can paper it over. If no-one believes the politician, that statement is worthless. International businesses have simply stopped believing the politicians.

The question is, who is going to pay workers, and with what. Greek companies will have to do what they have to do, but what about international businesses? What about trade? Most firms dealing with Greece are already demanding money up front. Banks are already organising transport mechanisms to get bags of cash over the border to pay workers. Obviously with a currency change all banking will come to a halt.

This also means that companies have emptied their Greek bank accounts. All this worsens the situation, and it is clear the euro in Greece already has no international value. There could still be a proper rescue but the effectiveness of that rescue would have to be believed. Unfortunately no-one believes there can be any effective rescue. One of the major political problems is the stark reality that Greece has not put in place a single reform demanded as part of the previous bailouts.

If you look at the fundamentals, Greece is in a far worse position now than it was three years ago. It long ago went beyond the point of no return. Businessmen are realists. I would say it’s over.

The real question then is, what happens about Spain and Italy? I note the airlines are making contingency plans for a Spanish exit. I think that might well be good for Spain, but it will put enormous pressure on Portugal if Spain does decamp. I’m not convinced at this stage, but I think it’s all over for Greece. If the politicians hang it out much longer they will do enormous damage to the whole european economy.

There are interesting times ahead. Let’s just hope we can get the Greek thing over and concentrate on the next problem.

A massive devaluation is on the cards for the new currency. That will make property cheap. But it wont solve the dead-beat state of the economy or the various restrictive practises which are still in place, and look likely to remain, or the massive government subsidy situation, which presumably is about to recoil from a serious shock after the bailouts stop.

One other interesting fact. Forgers have stopped bothering to forge euro notes. That is significant. If the forgers dont think the currency is worth forging what the heck are the rest of us to think?

Now might be the time to start looking at nice tourist spots with a view to buying after the crash. But do wait for that crash, it’s coming.


Auction Prices

I’ve been receiving several bulletins telling me about the state of the UK property market. The general view is doom and gloom. Prices are going to tank with a vengeance. Apparently we can expect a 25-30% drop sometime over the course of the next year or so.

This is an interesting view of the market. In theory prices ought to be dropping more, but during a recession people dont tend to move around so much so the market is quieter. It’s not that prices drop, they simply stagnate because not much is going on. You have to have an active market for prices to rise. You also have to have an active market for prices to fall. Prices will only fall when interest rates rise. Then the buy-to-let mob will be squeezed, and there will be a rush for the exits. That’s when prices will tank.

Those who want bargains will then sit back and smirk for a couple of years, and then go out and buy. But I’ll let you know when the time is right. We aren’t there yet.

Meanwhile I did promise a couple of weeks back that I would do a quick calculation on the auction index to see whether I thought prices in the real market place (by that I mean where money has changed hands, rather than prices asked) were still above where they should be.

My conclusion is that prices are seen to be too high by the general public, and there is undoubted price resistance.

The index should read somewhere between 11-20 to indicate a normal market. Anything above 20 represents an expensive market. Anything above 30 represents ridiculously high prices which are unaffordable.

The average across the country for July came in at just over 22, so prices are, in general, slightly higher than perhaps they should be in a normal market. Given that we are in a depression prices are too high. Those figures do include an insane figure from the Bristol area of 42.85, and one anomaly in the South of 0.

The most reliable figure is for the North of England where I used the most results. The overall average was 28.36, which is very high. Prices obviously have to come down from these levels.

The lowest reading was in East Anglia where I found a figure of 11.76, which is about where I would expect it to be for the kind of economic situation we are currently in.

If I am right and rents begin to waver and fall by the middle of next year, we will have the scene set for a resumption of house prices drifting down. However, as we have a largely stalled market, I dont think the falls will be great. Prices will only begin to fall seriously when interest rates go up. That could be some time yet as the whole fragile mess of the world banking system is only held in place by low interest rates

Unfortunately low interest rates stifle business, as it becomes uneconomic to lend money; and in a capitalist system, without credit, enterprises dont get off the ground, and economic life just stagnates.

Almost all economies are now managed economies, and they are managed for political not economic ends. That means the mess goes on. That also probably means interest rates will stay low all next year and maybe the year after. We only get a crash when they go up.

Meanwhile, prices in the eurozone seem to be holding, although the euro itself is not. Expect more falls against other currencies as it hits more head winds. The trouble is, Europe is the UK’s biggest trading partner, so any fall in the euro will affect the economic life of the UK, and that will also act as a drag on sterling.

Now isn’t the time to be looking for bargains. They simply aren’t there.


Unique Property Bulletins

The latest members’ bulletin on the Unique Property site lists some interesting items, but what really interests me is the way prices have come down for certain types of property.

I have over the years been featuring barns for conversion in Wales. I dont know why it is, but there seem to be more barns west of Oxford than there are to the east. For a while Devon was riddled with barns for conversion, and the number turned into an avalanche after the last foot-and-mouth scare. There are still barns available in Wales. The trouble is I think they are going to be available for a long time as they are priced well over the odds.

Some of the barns available in Wales cost £200,000 in their unconverted state. That is a ridiculous price. Compare that with a barn in Kent with a massive roof that looks to be in pretty good condition which is on the market with a guide price between £50,000 – £70,000.

There used to be a shortage of woodlands for sale, but that has also changed. There are woods for sale in the south all the time, and once again, prices are keen. A small site of approximately one hectare, again in Kent, is up for auction with a guide price of around £10,000.

There is even a double available. Half an acre of woodland with a barn shelter which might be developable.

Churches are on the market in ever growing numbers. When I first started the Unique property site there weren’t that many churches for sale. In fact, back then, everyone wanted a church they could convert into a home. Now the churches for sale are those that have already been converted. However, there is a rather nice Methodist chapel in Kent that is for sale at a very reasonable price. It looks rather nice, with some nice timbered beams, and would make a lovely home.

I am constantly being told that prices are still rising in London and the South-East but I cant see the evidence. In fact the latest Unique bulletin shows just the opposite. I think it is time I dusted off the old Auction Index to see how things are going. I suspect we may find that prices are at last sagging their way to a more affordable level. I’ll keep you posted.


Cheap Property for Sale

Cheap Property for Sale

Everybody wants cheap housing at the moment, so where is it?

First, let’s have a look at the regions.

In the North-East one of the cheapest areas is south of the Tyne, with Sunderland coming in pretty cheap.

On the other hand, if we come further south to the East Midlands the cheapest area is apparently the City of Nottingham. Everywhere else nearby is significantly more expensive.

Cheaper still is the North-West with Blackburn apparently the cheapest area.

Wales is cheaper still, but if we then move east into the West Midlands prices move up again, where they are slightly more expensive than the North-West.

Humberside has come up in the world with prices similar to those of the West Midlands.

I am skeptical of these figures. They certainly dont compare with what I see on a daily basis. That is borne out quite obviously when we come to East England. Maybe the prices in Peterborough are well up on most of the previously mentioned regions, but throughout East Anglia house prices are static, or dropping, and they do not represent value for money.

One of the big problems with all these figures is that they have to relate to something. Most people think I’m being silly when I say that the most important concept in maths is the equals sign. But when it comes to valuing something, money has no value on its own. It only has value as a means of exchange, in short, to get a deal, you have to have both sides happy with the equation. The equals sign is what joins the two sides. If there are inequalities then you dont have a deal..

So if there is not much well paid work in a region then there are not the pay packets to justify high house prices. In places such as East Anglia you also have large distances between big centres so that travel to work is expensive. With the current price of petrol that counts. Translated into simple maths that comes out as [not much money = low house prices].

As we come further south prices go up. However, that is not the whole of the story. The cheapest flats in the country are listed as being in Wales. The cheapest terraced houses are also listed in Wales. That of course is rubbish. There are terraced houses all across the north of the country with prices barely above £50,000, and such houses can be picked up for £30,000 without much trouble. And if the cheapest price of a terraced house in Rotherham is £69,000 then all I can say is someone isn’t looking.

These stats are not just wrong, they are plain silly. If you want cheap housing it can be found, but at a price represented in other ways. You wont find much well paid work about, or indeed much work at all, in cheap areas. Lincolnshire remains cheap, so does East Anglia. Wales is far more expensive than it should be. You can buy a derelict barn for £200,000. That’s insane for Wales.

Meanwhile there are bargains all over the place. You just need to be patient and to be clued up to the auction situation. I shall be looking into cheap deals in the auction market over the next few months. I may even start a cheap-as-chips section to the Unique Property Site. We’ll see how things turn out.

In the meantime I still maintain one of the cheapest ways into the housing market is to buy a de-commissioned pub, especially in the North-West. Some of these pubs have three-bed accommodation above, and some even have six bed flats upstairs. That means the pub could turn into a very big house or four reasonably sized flats. It’s a good way into the housing market and your pension at the same time.

In the last few months there have been several pubs advertised through the Unique Property Site at figures below £100,000. Many could have been turned into four flats. Even if you spent £10,000 per flat you could end up with four dwellings for less than £140,000 or £35,000 a flat (that’s cheaper than a flat in Merthyr Tydfil which is supposedly the cheapest area in the UK). You can live in one and rent the other three. After 25 years the mortgage is paid (by your tenants) and you have the equivalent of £1,500 a month coming in to live on.

In the meantime I will check out the bottom end of the market and get back to you.


Property Markets-2

Property Markets

Let’s start part two of this Property Market update with some figures.

In the first place I keep saying that rental costs and mortgage costs are roughly in equilibrium in the UK which means house prices are not about to collapse. That means, in the short term, house prices will remain roughly where they are. By short term I mean less than eighteen months.

On the other hand, if wages relative to inflation keep falling, then less money will be available for housing costs, and rents will come under pressure. That pressure may well start to show itself next year.

If rents come down, mortgage costs will start to look expensive. That will put pressure on house prices. If interest rates rise that will put more pressure on house prices. The medium term outlook therefore for house prices is for them to fall. By medium term I mean anything from 1-3 years.

The long term? Oh come on. Dont ask silly questions. Armageddon; the fairy Tinkabel arrives; take your pick.

Long term is a bit dubious owing to the fact that there are about 4,000,000 interest-only mortgages out there in the UK, As it happens, I have one myself. When the term is up (admittedly some considerable number of years away) what am I and my fellow unit holders planning to do? Redeem the darn thing? I should coco. We will all have to roll it over. And what terms will we be offered? At least my interest only mortgage represents less than 30% of the value of the house. In fifteen years time I hope it will represent quite a bit less. On the other hand, how many out there will be hovering close to the actual fire sale value of the house? Nasty!

According to figures published by various organisations the average buy to let (B2L) investor is getting between 4.5% and 7% gross return. Let’s say the general average is therefore 5.5%. If that’s gross then you have to take off insurance, maintenance, breakages, etc. The Inland Revenue, not noted for its generosity, allows 10% to cover all this. Hold on, if you are only getting a 5.5% return on the investment before taking off 10% for expenses………

Yikes, these guys are running on empty. Now what happens when the Bank of England raises interest rates by 1%? Suddenly you have several million mortgage holders going bust at a rather nippy rate of knots. What’s that going to do to the housing market?

Anyone looking to start a business in buy to let needs to take a course in therapy first.

But interest rates aren’t going to rise any time soon, are they? In fact, there is talk of lowering them still further.

Hmmm. Let’s move forward to 2014. Isn’t that when the Bank of England next needs to do some serious refinancing? If the UK is still limping pretty badly this time next year there is a serious risk that the UK will lose its AAA credit rating. That will put a nasty dent in the low interest rate scenario. It could very well lead to the UK having to raise interest rates to at least 1%. That’s enough to do damage to property businesses that are already running at next to no profit. That would lead to at least the worst B2L businesses selling up, which will naturally lead to more downward pressure on house prices.

We already have few first time buyers in the market. If the B2L buyers dry up, and instead become net sellers, then we have nothing driving the bottom end of the market.

With prices continuing to fall the whole scenario of 90% mortgages will also dry up. What sensible business is going to offer 90% finance on a commodity that is losing value by even 5% a year? In twenty-five months the deal will have gone negative.

90% mortgages are likely to disappear if things continue the way they are. The industry is looking at mortgages ranging between 50%-80%. That’s going to seriously impact on the number of buyers.

If the situation develops along those lines you are looking at a serious house price collapse.

Those of us who bought back in the early nineties dont care. We bought cheap. Our mortgages cost us peanuts, and the rent is still coming in. Even if rents drop 20% and mortgage costs double I still have a comfortable business model. But how many people bought property when I first put out my book on buy to let in 1993?

Nobody asks me to join any think tanks on this problem, but here is a thought.

The banks are going to have to set up some kind of arms-length businesses which will buy repossessed properties, and rent them out bringing in an income to service the debt that has built up on the under-water mortgages. I dont know how this would be affected by the regulations they are bound by, but I’m sure a very simple business situation could be legitimately set up to deal with the huge load of non-performing mortgages. I’ve even got a snappy little name for the new scheme: Rent to Redeem. Is that going to be the next property fad?

As you can see things are set to get much worse. After all, you simply cant have a situation where no-one’s making any money out of the real estate on which the country depends for its wealth. The UK no longer exports to the world. We have to rely on some sort of intrinsic wealth. If that is leaking away, we are all in big trouble.

Next week I’ll cast a gloomy eye on some other countries.


Real Estate Update-1

Real Estate Update-1

We are halfway through the year. How are things turning out?

I said at the end of last year that I expected house prices in the UK to stay much the same, or drop about 5%. So far, that’s how things are going. I dont envisage any change over the next six months.

I said that prices in Spain would drop between 10% and 15%. Once again that is what has happened. It’s happened slightly quicker than I expected, but that pattern will continue. Those of you who read all my stuff will know that I expect the price of an average 2/3 bed flat on the Spanish coasts or the Algarve to stabilise at prices in the €60-70k zone. Anyone paying more than that is throwing money away. I have noted that prices have already dropped to €75k for two bed flats in some of the tourist destinations. We still have a way to go.

I have also suggested that there has been a change in buying habits and I expect a severe contraction in the holiday home market in Europe. I dont think the retirement home market will change, but holiday homes have become a liability rather than an asset. It’s a market that is over.

I said I had no idea how the euro situation would pan out, and I still dont know, except that I did foresee politicians hanging it out (kicking the can down the road — extend and pretend — or whatever terms you prefer). That is how things are going. How long this mucking about can go on I still dont know, maybe another year, maybe more, who knows.

One thing is clear, things are not getting better, they are getting worse.

At the end of last year there were rumblings that Italy’s largest bank was on the verge of collapse. It’s been propped up, sort of. There have been worries that France is bankrupt, and Spain is too. However you look at it the whole thing is a total mess. That is not a good basis on which to do business across frontiers, or to get involved in property dealings.

The UK is no better off. The country’s debt equals its entire annual output. That’s suicidal. The traditional view is that once the figure goes above 90% you are on the road of no return. Maybe the country can work its way out of the mess. Unfortunately, the trading partners on whom we depend are broke. You cant increase sales to people who have no money. That spells a long period of languishing economic patterns. We are dependent upon the people using that pesky currency the euro, and the euro is losing value on a daily basis. As it loses value so the UK loses export cash, and so the £ looks more and more frail. In this situation we all go down together.

Let me go back a bit. The average boom period for the UK property market is about seven years. The average hiccup period is about 2/3 years. The average full-on property crash lasts 7-10 years. This situation is worse than that, thus we are looking at more than ten years to get things back on track. At one stage I suggested 2015-2020 as a likely period for the return of a positive housing market in the UK. That’s a guess and so isn’t worth much, but if asked to guess now I would say that is looking increasingly optimistic. A return to the good times much before the end of this decade is unlikely.

Let’s have a look at some simple maths. You all know I love trying to make figures stack up.

Because of the abnormally low interest rates set by central banks across the world, savers are having a hard time. That means money is being taken out of banks and put into other areas to get better returns. That is causing bank assets to drop drastically at the same time that their securities (mainly real estate) are losing value. That means the whole banking system is on skid row.

Remember we live in a capitalist society which rests upon a solid banking system. That means our whole economic way of life is threatened. That is not an academic matter, it’s serious.

The entire developed world’s banking system and currencies are flying by the seat of their pants. Put another way, we have no security of value anywhere in the western monetary system. We are all betting blind. It’s fun late at night playing contract whist and bidding blind, but it isn’t much of a way to win tricks.

I cant possibly deal with this whole question in one short blog, so next week I shall bombard you with a whole list of frightful figures. I dont want to frighten you, but as I never tire of saying, the bad news is more important than the good news. If you have the bad news you can at least prepare yourself.


Investing for a pension

Investing for a pension

I’ve been doing a lot of research for my new pension newsletter, The Big Pension. The aim is to find investments suitable for a pension scheme that will return at least 10% p.a. plus the rate of inflation.

So far I have found myself inundated with schemes. Those of you who cant find somewhere relatively safe to park your money and get a good return are in luck. The returns available at the moment are lucrative and plentiful.

The problem for borrowers is that the banks are not lending as they used to, and that means private sources of finance have to be found. That is good news for savers who want to lend out at good rates.

I’m finding a lot of freeholds for sale which are already leased out at very attractive rates. The general return on investment (ROI) is in excess of 15%, and that figure can be improved no end by taking on a mortgage at, say, 60% loan to value. Your underlying security is safe and solid. Your return should continue to be good. If the lease comes to an end you can sell with vacant possession, which means the sale price is higher than the price was when you bought, as you bought without vacant possession. It’s a win-win situation.

I’m also finding a lot of interesting deals on productive land, such as timber investments, and agricultural deals in various countries.

I’m also finding some interesting deals in the USA which I have avoided for the past seven years. The secret is to know where to buy and what to buy. I think I’ve found a very lucrative little niche area, and the returns are very good indeed.

Do have a look at the scheme:


Retirement Pension Plans: Get 14%+ Safely

Retirement Pension Plans. Get 14%+ Safely

As a result of some of my earlier comments on how much one can get for one’s investment money I have had a deluge of requests for more information on where I am getting good returns. Many of you have retirement pension plans which are simply not giving you much in the way of return on investment, and have questioned that high investment returns are all very well, but how safe are the underlying investments?

I could start to answer your questions about where I’m getting my high investment returns, but that would take me forever, and involve rather a lot of work. Instead I have decided to start a new investment newsletter which I will issue once a month. It will concentrate on one particular investment vehicle each month. It will also contain any real estate deals going to auction that month which, at their guide price will bring in a good return on the money used to purchase each property.

In short, I will be giving you a guide for your Retirement Pension Plans. The twin guiding measures for the investments will be simple. First, each investment must return a minimum 10% p.a. I shall be aiming at 10% plus the rate of inflation. That means I shall be looking for investment deals that produce at least 14% at the moment.

Second, I shall be looking for investment deals that are as safe as possible. There is nothing that is 100% safe, and it would be foolish to think there is. You can certainly put your money in the building society, which will currently bring you in just over 3%. With inflation running at 3.5% that means you are effectively losing money. Well, if that is your idea of 100% safety, where you are guaranteed to lose money, I dont think much of it. I shall be assuming that nothing is worth more than a 90% certainty of making money and protecting your capital. However, the investment deals I shall be choosing will come with that percentage of safety.

The first investment bulletin is now out and available. I have, in searching for other things, come across a series of property investments going to auction that should bring in more than the 14% minimum I’m looking for. One even promises to deliver 20%.

I was not intending to highlight property deals per se, and certainly not rentals, or leaseholds, but some just screamed out at me, so I decided to bring them together to show what can be achieved for your Retirement Pension simply by buying the right property.

For the next few issues of this new newsletter I have lined up a tax deal in the US which brings in between 16% and 50% and has a AAA investment rating. You just cant get better than that. And it isn’t a fly-by-night scheme, as it has been going very successfully for more than 200 years.

I have also lined up a wine investment bringing in up to 30% p.a., and which is getting even better as time goes on, and it is a scheme I have successfully invested in myself for the past thirty years.

I did wonder whether I would quickly run out of ideas, but I currently have about a dozen sitting on the table in front of me. They all bring in high investment returns. Not a single one returns less than 12% p.a., and all but two are what I would call 90% safe. The other two are fun investments which may appeal to some of you who are prepared to take a slightly higher risk.

In the first bulletin there is one deal that, if you leverage it using a mortgage, can potentially make you just over 52%, so you get your money back in two years. That’s some return on investment. Other deals come in at 20% and 15%, and a low one of only 12.5%. These are all very safe investments backed by real estate.

One thing I can guarantee and that is I will not bring you any get rich quick schemes. They dont work. This is very much a scheme based upon long term growth of money, and the creation of a retirement pension scheme that is far more secure than one based on shares, unit trusts, or bonds, and which is under your control with no management fees.

Now, if you’re serious about that retirement pension, here is the place to subscribe.
You cant really go wrong, ……unless of course you dont bother to click the link. In which case, good luck. You are on your own and you are sure gonna need it.

In the meantime do keep me posted on what you would like from me. I do try to tailor the information I give out to your needs.

john clare

Crisis in Spain?

Crisis in Spain?

I have spent the past week travelling along the backroads of Spain. Several things are quite clear to me.

Spain’s economy is in a mess. In the good old days your average restaurant/bar would have a menu del dia, which was usually good value, probably selling at around €9. Then there was the more expensive deal costing anything north of €15. Those deals are still with us, but we now have an addition to the club, the Menu Crisis. That often comes in at €7 or less. Times are indeed tough.

I also note that tapas portions are getting bigger. Are tapas portions morphing into meals? Some restaurants are advertising that their tapas only cost €2. Everything is getting cut to the bone.

There is also a severe problem with unemployment. I travelled through Andalucia, Murcia, Valencia, and a bit of La Mancha. The south is traditionally the worst for unemployment. But this crisis is different to the disasters in previous centuries.

Your average country town or village is holding up quite well. There is an underlying mood of optimism, at least in terms of survival. The hard luck situations are being absorbed. Wherever I went the visible side of life was cracking along as normal. The city of Murcia seemed to be doing better than I have ever seen it, and the darned place is still expanding. Albacete looked to be doing well. Seville always appears to be booming whatever may be happening in the back alleys.

If I turn to a village in Valencia province I have to wonder how the folk still look happy and smile, while the town hall issues a rather fine calendar. Every municipality runs a vibrant website, with masses going on. We may well be seeing Roadrunner still running furiously while hanging in mid air, and maybe in the next frame he will plummet down, but…..

Certainly a lot of businesses have gone bust. Certainly the Spaniards aren’t travelling like they used to. They certainly aren’t attending the Portuguese markets like they used to. But when I drive through apparently endless fields of fruit trees, corn, and vegetables I wonder how they can ever become really poor. This crisis is one of banks and governments, not whole economies.

I’m going to stick my neck out and say Spain is not about to go down the pan. It’s going to spring back. When, I dont know, but the doom and gloom is overdone. Mind you, if you own an apartment on the costas and want to sell, then you have a problem. But if you do own one of those I have to ask, why? I did warn you.

Next week I’ll continue my notes on Spain. I’ve got quite a few travel notes to catch up with, and maybe I’ll throw in a few pictures as well. See you then.