Gramática Babeliana

We believe that we have elsewhere noted the utter hopelessness that is the lot of Andalucía's educational system - doomed seemingly forever to issue forth the retards of Europe. One could easily be forgiven for thinking that this is yet another case of the land of fandangos, sun and thank-you-very-much-please bollocksing up anything that requires even the most minimal administrative skills. We, however, believe it goes deeper than this.

The writer's dear, departed (the assessment made by the first adjective clearly dependent on the truth of the latter) aunt Fe, in those rare moments in which she was not bellowing vitriol at some underling, would recount an incident which took place in a local restaurant. The waitress, recently released from high school, after taking the bulk of la Feíta's order and learning that the client wished to drink water, asked:

¿Agua con gas, o agua líquida?

Now, readers familiar with the Spanish language (knowing that the former is what is called 'sparkling water' in English and the latter 'flat') will immediately realize that the young lady had studied physics before launching herself into a career serving the hungry public. Both how tantalizingly close she came to understanding the material and how irremediably distant she remained for all her best efforts illustrate the challenge faced by educators in this part of the world. How do you teach people who upon encountering anything new or unknown immediately find something within their own experience to which it is similar and, upon successfully achieving this, assume they have understood the material? Life as an endlessly repeating series of similes.

Examples of this abound in these parts. The most recent that we came across was when we were being shown the garage in which we had recently purchased a parking spot. Located on the Calle de los Pósteles*, the entrance came equipped with an automatic door triggered by an infrared zapper. The guide's only lament was that the cédulas had not yet been installed - not referring to the final occupation license issued by the town hall (or even the covered bond into which the financing bank rolled up residents' mortgages) but to the photo cell that prevents the door from closing whilst a car is still in its path. Célula was the word he was striving to communicate but, since it was new, he immediately turned it into something already known.

*The humour of the situation is amplified a few fold when one knows the origin of the street's name. Pósteles is, obviously, the plural of the word, póstel. Not to be found in the RAE dictionary, it is the local corruption of poste, a lamp, electric or telephone pole.

That this has been institutionalized as a street name has not escaped the attention of Google Maps.

Trevor has popped up a YouTube performance by Spanish comedian, Chiquito de la Calzada. The southern version of Castillian with which he so beautifully brings his audiences to tears is known as costero. It is spoken, in forms some less intelligible than others, all along the Mediterranean and Atlantic coasts from Motril, in Granada province, to Ayamonte, on the border with Portugal. His is the Málaga version.

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Raining Down Money

What with the Christmas edition of lotería nacional captivating the imaginations and hopes of all of Spain this morning, is there a better moment to mention what an economic cripple* this country has generally been when free money wasn't falling on it from the heavens? Outstanding examples are the siglo de oro and the period following accession to the European Union.

In the same vein, consider President Zapatero's shameless bitching and grovelling to get a seat at the G-20 financial crisis meetings. It perhaps had not occurred to him that a country that receives 7 billion euros a year in 'structural' and 'cohesion' funds from the EU, based on certain regions' demonstrated ability to never catch up to the pack, is perhaps not fully qualified for membership.

*Obvious exceptions to this in the past were the cities and hinterlands of Barcelona and Bilbao that were very successful in creating self-sustaining economies not based on arbitrating property transactions of possibly dubious legality, cheating siblings out of inheritances, tax evasion, the purchase of titles and the hoarding of cash.

Good luck and happy holidays.

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The Law Of The Many Zeros

Despite the obvious hidden cost of later being forced yet again to shave the palm of our right hand, Mr. Sánchez' comment to our last post that perhaps house sales in Spain were continuing to fall precipitously has us thinking - and not just about exactly how we are going to defend our assessment that the line was on the verge of flattening out, evidence notwithstanding. But first we must deal with The Law of the Many Zeros.

Judging by the frequency with which the number appears, it seems to have been widely accepted that there are one million (1,000,000) unsold new homes in Spain. And if one is to believe this blog entry - dated December 25, 2008 - and this - published September 14th last - this figure has now passed from the realm of the considered estimate to that of the universal constant. Such is the near-Einsteinian attractiveness of a number that is not a zero followed by a long string of those that are. The dark matter binding Spanish real estate to its fate of eternal entropy.

The power of Many Zeros is sufficient to utterly negate the fact that 187,387 new homes were sold in the above period, work was started on approximately none and huge numbers of works-in-progress were abandonned for lack of funding or market. This is because when a pundit tacks a huge line of zeros behind another number, the uncritical and desperate-for-truth everyman cuts the commentator a tremendous amount of slack when it comes time to render accounts. As an approximation, one might consider what is our guess as to this effect.

1). An estimate of 1,000,000 (six zeros) will be considered to have been correct if the 'truth' turns out to be anywhere between 800,000 and 1,200,000;

2). Another of, say, 900,000 will likely only get the benefit of the doubt if the value turns out to be 100,000 above or below;

3). However, if some fool were to go out and actually count the number of unsold new homes and come up with 943,627, the rabid masses will have his balls on a platter, hang a dead cat from his lintel and pelt his person with overripe tomatoes whenever he ventures to leave the shelter of his home for a loaf of bread if he misses by anything over 10,000;

4). Estimates, on the other hand, over one million are merely redundant unless one uses the geometric multiplier effect of amplifying the first number. Thus, guesses like Edward Hugh's 3,000,000 will probably be considered to have been accurate if the actual sum turns out be anything over one hundred and three.

Returning to the Random Spaniard's comment, we thought it might be half interesting (at least for Gillette's bottom line) to calculate to what degree current new home sales were managing to decompose Spain's stock of new housing. To this end - on the, we believe reasonable, basis that virtually no new inventory has been added in the last year - we've done a monthly calculation of the number of years it will take to deplete the offer at trailing one year sales volumes for the last twelve months... and we've done it for proposed housing inventories of 1.2 million, 1 million and 800,000 units.

The procedure is as follows:

1). Calculate the rolling 12-month sum of sales for each month;

2). Divide, in month 1, the inventory by the above figure;

3). In month 2 (and ensuing months), subtract prior period monthly sales from previous stock and divide the result by the yearly sales for the current period.

The end result of this is an ongoing approximation of how many years it will take to work, at current levels, the inventory of houses to the impossible and undesirable level of zero. And the surprise is that, for a starting figure of 1 million homes, the resulting number is incredibly stable - ranging between 3.53 and 3.62 years over the stretch. For 1.2 million the number trends slightly upward, rising by 0.18 years to 4.46 from November to October. For 800,000, the figure falls by 0.18 years to 2.67.

Not just a matter of doing our bit to reglue and polish up the warped and tarnished veneer of science once sported by the study of economics, the relative constancy of these results - they keep selling houses and the number of years supply doesn't budge - leads us to believe that Spanish housing is, in fact, a radioactive element. We've called it habitatium and calculated, with the help of 1728.com, the half life for the three versions so far discovered.

Habitatium 1,200,000 - 3.72 years

Habitatium 1,000,000 - 3.04 years

Habitatium 800,000 - 2.36 years

So, 'Woooo!', says the reader. 'At the end of October, 2011 there are still going to a half a million unsold new homes!'. Undeniable yes, but the real question to be asked is 'Where are they going to be?'.

The last time we made note of one these estimates (and admittedly not knowing if the expert was an adherent to the Many Zeros faith), it was stated somewhere that there were 450,000 finished and unsold homes along the Mediterranean coast - Spain in its entirety to many readers from northern Europe as well as Telegraph readers who deny such affiliation.

These places, by all accounts, are still unsellable. So, some guess as to how many years supply of new Spanish dwellings not located on the Med (of which there might only be 550,000) might be appropriate. We'll do that.

Arbitrarily assigning 70% of all sales to the 55% of properties that are non-Mediterranean turns a stock of 2.6 years. Raising it to a not entirely unrealistic (given the lack of foreign buyers) 80% lowers this to 2.16 years - product of the lessening of the inventory from 550,000 to 386,000 units over the period.

Half-life? Not applicable because the rate of decay is increasing.

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Home Sales

The INE has released October's home sales statistics. Derived from new deeds registered, the figures show a month-on-month decline in purchases of new homes in excess of the normal seasonal variation. Sales of second-hand dwellings were, in contrast, relatively firm.


Is there some possibility that the not entirely compatible goals of asset value preservation and the need to sell foreclosed or exchanged-for-debt new homes are causing financial institutions that find themselves in the promotion business to be too rigid with regards to pricing? If we were at all right in our earlier take that current banking practices were mildly deflationary in terms of housing prices, we might see more of this in the future.

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New Discovery

We received a note informing us of the existence of an interesting website named Tus Acciones. The site provides up-to-date information on short sales, dividends and volatility (all complemented with really good graphics) for most issues trading on the Spanish mercado continuo - plus a daily compendium of announcements from market supervisor, the CNMV.

The short sale portion (entitled 'Prestadas' in the links at the top of the page) presents an order-able list of all followed issues with gross numbers and comparisons over time. Clicking, however, on the name of the stock in which one is interested leads to a graph showing up to two and half years of short sale information, presented as gross numbers, percentage of outstanding stock (not public float) or value in euros at the day's closing price. The same individual stock page will provide information on dividends.

If volatility has a hold on the reader's heart, the appropriate section would be 'Tendencias'. CNMV pronouncements? They can be found here.

Tus Acciones is a brilliant effort (especially knowing the amount of effort it takes to extract any useful information on this market from what is publicly offered) that only elicits one suggestion from us - add 'short interest' to the choices for viewing short sale info. That's the number of shares sold divided by the average daily volume of the last few months. In other words, how many days trading do outstanding short sales represent.

The graphic is a screen grab (with permission, we hope) of the short sale history of BBVA. The yellow line, corresponding to the left axis, is the number of shares outstanding. The other is the share price. Click on it to enlarge.

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Portfolio

Having reached its target age of 13 weeks, the long-short portfolio in the right hand sidebar was closed down on Friday. A bit of post-game analysis:

1). It outperformed the Ibex 35 (small consolation that it may be) 1.43% to 0.20%;

2). Of the 63 days it was in play, 36 were spent ahead of the index;

3). The portfolio outperformed the index by a maximum of 3.80% and underperformed by, at worst, 3.03%;

4). The standard deviation of daily returns ended the period at 0.27%, compared to 0.76% for the index;

5). The maximum gain was 3.03%, at the beginning of November;

6). As a consequence, leverage of 1.6x could have been applied without the portfolio having been more volatile than the index. If that were acceptable, it would have returned more or less 2.3% - 9.2% annualized (expenses not included). On the other hand, the portfolio never went negative...;

7). The profits were, in the main, attributable to the short trades - 6 of the 7 being winners compared to 2 for the longs.

More info on this can be found poking around the 'portfolio' category of this blog.

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The Earth's Roof

Aceites Cazorla - the olive oil mill on the roof of the earth.

Yeah, yeah. Their website is really tacky. This is Andalucía profunda.







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Tools Of The Trade

Monica - practicing some new and mysterious olive picking ritual.










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The Bride Wore Black

Those unfamiliar with the art of olive harvesting might not know that, in many places, the fruit is knocked from the tree on to large (say 12 x 6 metres and upward) plastic meshes that are layed on the ground around the tree. The moving of them from one trunk to the next often gives the impression of being a bad-natured commentary on the sacrament of matrimony.

Once again, from the niece. 1000 px version on click.








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Photographic Interlude

We threatened a couple of weeks ago to quit blogging and go back to the land. The rain which interrupted that plan has now gone away, so posts may find themselves substituted by photographs in the meantime. All were taken by the writer's niece, Rocío, who was visiting from the Big City this weekend.

The first was shot facing south on a perfectly clear day with the afternoon sun low in the sky - before she had noticed exactly how much dust comes off an olive tree that is being smacked about.

Click on it to see the 1000 px version.

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Partido Monotonista

A recent interview published by Welling@Weeden (subscriber only but a brief synopsis can be found here) with fund manager Andrew Smithers - in which he convincingly argues that the best economic outcome would be very slow growth over an extended period of time - has given new impetus to the monotonist thesis so dear to Ibex Salad. So much so that we are starting our own political party in preparation for the near-eternally distant (given the lot that are running the place now) 2012 elections.

Readers should feel free to suggest additions, or even changes, to the Partido Monotonista's slate of candidates. We're especially interested in a post for Esperanza Aguirre. We want her in there, but we can't figure out what she's good for.

The PM Slate

Minister of External Affairs - For his proven ability to rub elbows with the diplomatic world's crème de la crème (that's our man on the right in the photo - in case the reader is confused) whilst maintaining top level contacts with the toughest of terrorists, Cambrils homeboy Josep-Lluís Carod-Rovira is the perfect choice for this delicate assignment.


Governor of the Bank of Spain - Who better than the country's current president, José Luis Rodríguez Zapatero, with his proven ability to display Teutonic budgetary restraint even in times of crisis.












Minister of Public Transport - The new age of environmental consciousness now dawning as the crisis forces us to admit the error of our ways promises a resurgence in the use of public transport, is there anyone more qualified to direct this post so vital to the transformation of the Spanish economy than ex-president José María Aznar (seen here discussing modifications to the schedule of Madrid cercanías with George W. Bush).







Minister of the Environment - Chastened by his demise as Minister of Justice after having been caught hunting without a license, we can think of no one more aware of how mother nature can bite back than Mariano Fernández Bermejo.




Minister of Finance - Who more experienced in the practice of prudent financial stimulus than Álvaro Pérez Alonso - 'El Bigotes'? Seen here both before and after his arrest for influence peddling.











Minister of the Middle Class - Armed with his proletarian beard and gaditano credentials, Cándido Méndez will never bow before demands that the tenured, unionized and permanently contracted Spanish middle class share any of the burden of supporting the no-count mass of unemployed young mileuristas.


Minister of State Subsidies - With two decades of experience making sure that taxpayer funds go to the worthiest projects of the most loyal subjects (oxymoronic as the preceding may be), Manuel Chaves is the man for this post.











Minister of Regional Costume - Spain, tourism being so important to its economy, needs this new department. We propose Francisco Camps, supreme chief of the Valencian Shiny Suit tribe, as inaugural minister.











Minister of Public Works and Festivities - between the to-be-repeated Olympics bid and the burying of the M-30, it has to be Madrid mayor Alberto Ruiz-Gallardón.




Minister of Housing - bankrupt in Murcia in 1992, prior to his 2006 arrest on various corruption-related charges the ultra-efficient zoning and building advisor to the city hall of Marbella, Juan Antonio Roca, managed to amass 2 billion euros in wealth through his marked ability to cut through red tape.



Minister of Justice - Seen here congratulating bosom buddy Francisco Camps (Valencian regional president and proposed Minister of Regional Costume), Juan Luis de la Rúa currently heads the Superior Court of Justice of the same autonomous community. Who says Spain lacks transparency?

Correction: We weren't paying attention. Seems that Mr. de la Rúa stepped down from the TSJV a few days ago. Improves our chances, no?



President - still searching for a suitable candidate, we'll use the guy on the left as an interim excuse.










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Me Hit Ball With Stick

Of tremendous interest to the North American press over recent days has been the odd automotive accident in which golfer Tiger Woods found himself involved. What we could surmise from the two or three paragraphs we read on the matter is that this occurred on the residential street on which he lives with his family, at slow speed, did not implicate any other vehicle and was somehow the product of his wife having found out he was indulging himself in a bit of California poontang.

Corollary to the complaint best voiced as, 'Who gives a flying fuck where Tiger Woods is dipping it?', is the larger issue concerning the limited utility of a social order that allows a person whose main life skill is the same one that separated australopithecus from mere apes four million years ago to become a billionaire in 2009.

So there.

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Rent Or Buy

Spanish readers of this blog who remain convinced that, under all circumstances, renting a home is merely 'putting money into the landlord's pocket' (as are 99% of their compatriots) might want to play with this New York Times calculator. Plug in some numbers across the top and, fine tune them in the 'Advanced Settings'. Finally adjust the sliders on the left with a guess as to expected anual property price appreciation and rent increases. The resulting graph will give an idea as to which choice is the economic decision - and over how long a time period.

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