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Gas companies face Californian wipe-out, say S&P, Moody’s

Gas companies face Californian wipe-out, say S&P, Moody’s

Ratings agencies say the state’s bid to go 100% renewable poses a ‘significant threat’ to gas generators’ credit stability

Newport Wedge, California (Photo: Tom Walker/Flickr)

Gas companies in California face credit downgrades, ratings agencies say, after the state pledged to get all of its power from renewable sources by 2045.

On 10 September, California governor Jerry Brown signed a bill which would require 100% of the state electricity’s to come from carbon-free sources.

That would have no immediate effect on most gas generators, according to a report by Standard & Poor’s (S&P) analyst Michael Ferguson this month. However, he said: “We believe that over the long term, with the growth of renewable energy, these utilities face a significant threat to their market position, finances, and credit stability.”

Within a fortnight of the California bill, S&P had revised its ratings outlook for Middle River Power, an equity firm backing a natural gas-fired plant providing electricity for 500,000 people in San Berdinado, from stable to negative. On top of increased competition from renewables, the credit agency cited “a more challenging (…) regulatory environment for natural gas-fired assets over the long term because of aggressive renewable energy goal”.

“This gas plant is going to have to be refinanced,” Ferguson told Climate Home News, “and it’s going to get more and more difficult to refinance over the long-term because they are going to be facing increasing renewable penetration… Longer-term the prospects for [all] gas generation are going to be weaker.”

S&P’s report largely echoes an assessment by its rival Moody’s, released in September. According to Moody’s, the state’s new legislation was “credit negative” for companies Calpine Corporation, NRG Energy, Pacific Gas & Electric Company (PG&E), Southern California Edison Company, Los Angeles Department of Water and Power.

…click on the above link to read the rest of the article…

Defiant Energy Policy of Mexico’s President-Elect Rattles Moody’s and Fitch

Defiant Energy Policy of Mexico’s President-Elect Rattles Moody’s and Fitch

But it’s going to be tough; he’ll need more than luck to pull it off.

Moody’s has rated the $2 billion of senior unsecured notes due 2029 that Mexico’s state-owned oil company Pemex is in the process of issuing one notch above junk. Pemex is offering to pay a coupon interest rate of 6.5%. In its report on Friday, Moody’s blamed the company’s “weak liquidity, a heavy tax burden and the resulting weak free cash flow, high financial leverage and low interest coverage; and challenges related to crude production and reserve replacement.”

Moody’s is also worried about the large amounts of debt coming due in 2020 and beyond. And Pemex will continue to be “dependent on debt capital markets to fund negative free cash flow,” it said.

Fitch Ratings downgraded the outlook for Pemex’s debt from stable to negative amid concerns about the incoming government’s proposed energy policies. It rates Pemex three notches above “junk” (BBB+), but only because the company is state-owned. Its standalone credit profile — if Pemex were not backstopped by the Mexican state — is junk, seven notches into junk (CCC).

Fitch has also warned earlier that if Pemex’s credit rating drops, so, too, will Mexico’s sovereign debt rating. Even a small deterioration in credit risk could exact a heavy toll on both the company and the country.

The outlook revision to negative from stable “reflects the increased uncertainty about Pemex’s future business strategy coupled with the company’s deteriorating standalone credit profile,” Fitch said in its report.

Fitch’s downward revision was cited by analysts as one possible factor in the fall of the peso last week to its lowest level in over a month. CI Banco analyst James Salazar said that Fitch’s Pemex assessment is a reminder that the company’s “finances should continue to be handled with great caution so as not to cause additional imbalances that will increase its debt.”

…click on the above link to read the rest of the article…

Moody’s Cuts Italy’s Debt Rating To One Notch Above Junk

Moody’s Investors Service has today downgraded the Government of Italy’s local and foreign-currency issuer ratings to Baa3 from Baa2. The outlook on the rating has been changed to stable, meaning that any downgrade to junk – the worst case scenario – has been taken off the table for the time being.

Moody’s also downgraded to Baa3 from Baa2 the local and foreign-currency senior unsecured bond ratings. The foreign-currency senior unsecured shelf and MTN ratings were downgraded to (P)Baa3 from (P)Baa2. Italy’s local-currency commercial paper rating and foreign-currency other short-term rating were downgraded to P-3/(P)P-3 from P-2/(P)P-2. The rating outlook is stable.
The key drivers for today’s downgrade of Italy’s ratings to Baa3 are as follows:

1. A material weakening in Italy’s fiscal strength, with the government targeting higher budget deficits for the coming years than Moody’s previously assumed. Italy’s public debt ratio will likely stabilize close to the current 130% of GDP in the coming years, rather than start trending down as previously expected by Moody’s. Moreover, the public debt trend is vulnerable to weaker economic growth prospects, which would see the public debt ratio rise further from its already elevated level.

2. The negative implications for medium-term growth of the stalling of plans for structural economic and fiscal reforms. In Moody’s view, the government’s fiscal and economic policy plans do not comprise a coherent agenda of reforms that will address Italy’s sub-par growth performance on a sustained basis. Following a temporary lift to growth due to the expansionary fiscal policy, the rating agency expects growth to fall back to its trend rate of around 1%. Even in the near term, Moody’s believes that the fiscal stimulus will provide a more limited boost to growth than the government assumes.

…click on the above link to read the rest of the article…

Economic Damage Wrought By Hurricane Florence Nearly 10 Times Worse Than Expected

Rivers in the Carolinas are still rising and North Carolina Gov. Roy Cooper has warned that it still isn’t safe for displaced residents to return to their property. But that hasn’t stopped Moody’s from releasing the first estimate of the economic damage wrought by Hurricane Florence.

According to the Wall Street Journal, the ratings agency’s estimates put the total economic toll at somewhere between $38 billion and $50 billion – more than double an initial estimate of between $8 billion and $20 billion from Goldman Sachs and S&P.And nearly ten times CoreLogic’s initial estimate of between $3 billion and $5 billion.

If damages reach the upper end of that range, it would leave Florence in seventh place among the biggest storms, just after 1992’s Hurricane Andrew, according to Moody’s estimates.

Florence

Notably, the expected toll is lower than each of last year’s three major hurricanes:

Based on Moody’s estimates, last year’s three hurricanes each caused more damage than Florence: Harvey’s tally reached $133.5 billion; Maria’s $120 billion; and Irma’s $84.2 billion.

Still, the storm has continued to wreak havoc in the region as the death toll has risen to 41. Rivers in the Carolinas have continued to rise, and rescues are still being carried out by first responders. Meanwhile, water levels for the Cape Fear River are expected to peak on Saturday:

Florence, which made landfall Sept. 14 and has claimed 41 lives in the Carolinas and Virginia, is continuing to wreak havoc. Rivers in the Carolinas are continuing to rise, and more than 600 roads were still closed Friday in North Carolina. North Carolina Gov. Roy Cooper warned it still isn’t safe for many people to return home including the 3,700 who remain in shelters.

…click on the above link to read the rest of the article…

Moody’s: Illinois pension debt-to-revenue ratio hits all-time high for any state

Moody’s: Illinois pension debt-to-revenue ratio hits all-time high for any state

According to a new report by Moody’s Investors Service, Illinois’ unfunded pension liabilities equaled 601 percent of state revenues in 2017, a U.S. record.

Illinois’ pension debt has set a new record to which no state should aspire.

Credit ratings agency Moody’s Investors Service released a report Aug. 27 comparing unfunded pension liabilities across all U.S. states. According to the report, Illinois’ unfunded pension liabilities grew 25 percent in fiscal year 2017 to $250 billion. That equates to 601 percent of “own source” revenue, meaning money brought in by the state excluding federal funds. That ratio of pension debt to revenue is the highest on record for any U.S. state, according to Moody’s. The national median is 107 percent.

This matters much for the same reason banks look at an individual’s debt-to-income ratio when considering applications for a personal loan. Banks typically won’t issue a qualified mortgage to anyone with a debt-to-income ratio of more than 43 percent.

When a state’s pension debts far exceed its revenue, that means those debts are less likely to be repaid. Illinois’ inability to manage its pension system in a sustainable and affordable way is one of the main reasons both Moody’s and S&P Global Ratings put the Prairie State’s bond rating just one notch above “junk” status. The state’s credit rating has been downgraded 21 times since 2009, primarily due to runaway pension debt.

illinois credit rating downgrades

A low bond rating increases the cost of borrowing money for taxpayers and makes it difficult for state government to invest in core services residents want, such as needed infrastructure improvements.

Other measures of the state’s ability to repay pension debt tell a similarly bad story for Illinois. The state has the worst pension debt in the nation as a percentage of both GDP and personal income, which are broad economic measures that indicate how much money is being brought in by the funding sources for government expenditures: individual and corporate taxpayers.

…click on the above link to read the rest of the article…

‘Tipping Point’: These Charts Show Some of The Worst Currencies Of 2018

‘Tipping Point’: These Charts Show Some of The Worst Currencies Of 2018

Foreign currencies – especially the Emerging Markets – are having one of their worst years on record.

And investor anxieties aren’t easing up. . .

I wrote two weeks ago about the strong dollar and the chaos it’s creating for the Emerging Markets. But many don’t realize just how bad things have gotten. And it’s all thanks to the Federal Reserve’s tightening and quantitative tightening.

For starters, let’s just take a look at some of the worse performing currencies this year. . .

First – The Turkish Lira

I wrote a very bearish assessment of Turkey and their currency – the Lira – back in early March.

And since then, the crisis in Turkey has dominated the news stream.

A big reason for Turkey’s currency crisis stems from the fact that their external debt burden has soared over the last few years. This means that Turkey borrowed significant amounts of U.S. dollar denominated debts (and euros).

Remember: when the dollar gets stronger – and when the Federal Reserve raises rates – the external debt burden gets harder to service.

And because the country has had a plaguing inflation problem over the last couple of years – this caused the Lira to slowly depreciate on foreign exchange markets.

But due to the U.S. dollar’s shocking rally since March 2018, the Lira really started to collapse. For instance, more than a third of its value got wiped out in just the last 30 days.

Making matters worse – the Turkish Central Bank Deputy Governor is rumored to resign. And Moody’s just downgraded the credit ratings of 20 Turkish financial institutions – such as banks.

Turkey’s increasingly fragile economy and currency signals that things are still far from over. . .

…click on the above link to read the rest of the article…

It’s Just Starting: Moody’s Warns A Deluge Of Retail Bankruptcies Is Coming

2017 was a perfect storm for “brick and mortar” retailers who officially lost the war with Amazon, and no less than 30 retail chains filed for bankruptcy in a year in which the CEO of Urban Outfitters said the “retail bubble has now burst“…

Source: Reorg First Day

… bringing the total number of Chapter 11 cases since mid-2015 to 50, accounting for over $20 billion in liabilities.

So is the worst over for retail, or is the sector just now approaching the eye of the hurricane?

According to the latest Moody’s research report on the retail sector, the rating agency now forecasts at least six retail & apparel issuers defaulting over the next 12 months, with most of these occurring in the first half of the year. 

While the good news is that the industry default rate is expected to peak at 12.43% this March, Moody’s cautions that the still-high default forecast for the remainder of 2018 points to more pain before this lower ratings rung in retail stabilizes. Recent defaulters include Tops Markets, which filed for Chapter 11 on February 21, which followed Bon-Ton’s filing on February 4. Charlotte Russe and Charming Charlie both defaulted in December, and Claire’s has hired restructuring advisors.

Meanwhile, the Toys “R” Us bankruptcy in September its overnight Chapter 7 liquidation has only added to pressures by accentuating potential pressures between vendors and the more stressed retailers, even as it left some 33,000 employees without a job.

The problem is that it only gets worse from there, and the rating agency expects upcoming maturities for distressed issuers will spike in 2019. Defaults are growing as many struggle with high leverage and challenged operating performance. These challenges are compounded by the biggest risk – mounting maturities –  which spike in 2019. Overall, issuers in the Caa1 and lower group face $14.9 billion in public and private maturities due 2018 through 2020 as shown in Exhibit 1. The lion’s share of these maturities (Exhibit 2) is attributable to just five issuers:

  • Sears Holdings Corp. (Ca negative),
  • Neiman Marcus Group LTD LLC (Caa2 negative)
  • Claire’s Stores, Inc. (Ca negative),
  • BI-LO Holding Finance (Caa1)
  • Guitar Center Inc. (Caa1 negative).

…click on the above link to read the rest of the article…

Moody’s Threatens US Downgrade Due To Soaring Debt, “Fiscal Deterioration”

Back in 2011, Standard & Poors’ shocked the world, and the Obama administration, when it dared to downgrade the US from its vaunted AAA rating, something that had never happened before (and led to the resignation of S&P’s CEO and a dramatic crackdown on the rating agency led by Tim Geithner).

Nearly seven years later, with the US on the verge of another government shutdown and debt ceiling breach (with the agreement reached only after the midnight hour, literally) this time it is Warren Buffett’s own rating agency, Moody’s, which on Friday morning warned Trump that he too should prepare for a downgrade form the one rater that kept quiet in 2011. The reason: Trump’s – and the Republicans and Democrats – aggressive fiscal policies which will sink the US even deeper into debt insolvency, while widening the budget deficit, resulting in “meaningful fiscal deterioration.

In short: a US downgrade due to Trumponomics is inevitable. And incidentally, with today’s 2-year debt ceiling extension, it means that once total US debt resets at end of day – unburdened by the debt ceiling – it will be at or just shy of $21 trillion.

We expect if not a full downgrade, then certainly a revision in the outlook from Stable to Negative in the coming  months.

Here’s Moodys:

The stable credit profile of the United States (Aaa stable) is likely to face downward pressure in the long-term, due to meaningful fiscal deterioration amid increasing levels of national debt and a widening federal budget deficit. However, the US economy is very strong, wealthy, dynamic and well diversified, and its role in the global financial system is unmatched. These factors help compensate for the impending fiscal weakness, Moody’s Investors Service says in a new report.

…click on the above link to read the rest of the article…

 

 

Moody’s Pegs Venezuela in “Deeper Phase” Of Financial Insolvency

Moody’s Pegs Venezuela in “Deeper Phase” Of Financial Insolvency

Venezuela

Venezuela is now in a “deeper phase of economic stress,” Moody’s Investor Service said on Wednesday, according to The Oil and Gas Journal.

Falling oil production and tough economic sanctions have increased pressures on the nation’s financial capacity. Mismanagement and underinvestment in the country’s oil and gas industry is causing defunct facilities to produce low quality oil that does not meet the requirements of its usual buyers.

Moody’s sees “a negative feedback loop between declining production across all economic sectors, accelerating scarcity of hard currency, and an economic policy mix defined by price controls and forced discounting that exacerbate supply shortages and hyperinflation.”

Venezuela’s production is falling faster that high barrel prices can fill the revenue gap, the credit rating agency added.

“The fall in production will only exacerbate cash-flow stress,” Moody’s research note reads. “While oil prices have rallied in recent months, the decline in oil production will more than offset the would-be increase in dollar inflows from oil exports. This has negative implications for both debt repayment capacity and Venezuela’s already grim economic outlook.”

Hyperinflation will continue at the 4000 percent level through 2018 due to the financial deterioration.

President Nicolas Maduro is still intent on milking the digital currency fad to help alleviate the cash shortage and circumvent U.S. sanctions. After proposing an oil-backed national cryptocurrency called the petro, Maduro is now calling for an OPEC-wide one that would also include other large producers.

Speaking to media in Caracas after a meeting with OPEC’s secretary-general Mohammed Barkindo, Maduro said earlier this week, “I will make an official proposal to all OPEC members and non-OPEC states to work out a joint cryptocurrency mechanism backed by oil.”

Some 5 billion barrels of crude have been set aside to back the petro, which would be priced at $60 a piece, Russian Sputnik reports, adding that the first batch of petros to be sold will be of 100 million coins. The price per coin is tied to the price of Venezuelan crude.

Hartford Could Default On Its Debt As Soon As Next Month, Moody’s Says

Hartford Could Default On Its Debt As Soon As Next Month, Moody’s Says

Moody’s latest warning about Hartford Connecticut is its most dire yet.

In a report issued Thursday, the ratings agency’s analysts said Hartford, Connecticut’s once-proud capital city, could default on its debt as soon as next month, forcing the capital of the country’s wealthiest state (on a per capita basis) into bankruptcy.

If the city doesn’t change course (and given its shrinking tax base and the departure last year of Aetna, a major insurance company that was founded in Hartford and had located its headquarters in the city for more than 150 years, reforms appear unlikely), receive a state bailout or strike some kind of deal with its creditors, Moody’s says lenders can expect it to run up annual deficits in excess of $60 million through the next 20 years.

Moody’s (along with its rivals Fitch and Standard & Poor’s) downgraded Hartford’s credit rating on Sept. 26 to Caa3 from Caa1, reflecting a view that creditors would only manage to recoup between 60% and 80% of their principal should Hartford default.

Of course, there’s no guarantee that the state government will be there to support troubled Hartford. Four months into the fiscal year, Connecticut is the only state in the country that hasn’t passed a budget as lawmakers the state’s lame-duck Democratic Gov. Dannel Malloy joust over how to close a $3.5 billion two-year budget deficit. In a reflection of the state’s broader fiscal crisis (as is the case in many US states), Moody’s says Hartford’s public employee unions represent a “significant constraint” to cutting the city’s deficit, as the Hartford Courant points out.

Moody’s called Hartford’s unions “a constraint” to trimming the city’s deficit. “Contractual salary increases and employee benefits are significant contributors to the city’s long term structural imbalance,” the report read. Unions would have to make “significant concessions” for Hartford to narrow those deficits, it said.

…click on the above link to read the rest of the article…

De-dollarization Not Now

De-dollarization Not Now

USD-denominated debt outside the US hits record – even junk bonds.

China announced today that it would sell $2 billion in government bonds denominated in US dollars. The offering will be China’s largest dollar-bond sale ever. The last time China sold dollar-bonds was in 2004.

Investors around the globe are eager to hand China their US dollars, in exchange for a somewhat higher yield. The 10-year US Treasury yield is currently 2.34%. The 10-year yield on similar Chinese sovereign debt is 3.67%.

Credit downgrade, no problem. In September, Standard & Poor’s downgraded China’s debt (to A+) for the first time in 19 years, on worries that the borrowing binge in China will continue, and that this growing mountain of debt will make it harder for China to handle a financial shock, such as a banking crisis.

Moody’s had already downgraded China in May (to A1) for the first time in 30 years. “The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows,” it said.

These downgrades put Standard & Poor’s and Moody’s on the same page with Fitch, which had downgraded China in 2013.

But the Chinese Government doesn’t exactly need dollars. On October 9th, it reported that foreign exchange reserves – including $1.15 trillion in US Treasuries, according the US Treasury Department – rose to $3.11 trillion at the end of September, an 11-month high, as its crackdown on capital flight is bearing fruit (via Trading Economics):

So why does China want these $2 billion in US dollars? For one, they’re still cheap, given the low yield, which is expected to rise as the Fed has started to unwind QE. And two, China might be interested in creating a benchmark for dollar-bond trading in China that could help set prices for Chinese corporate debt denominated in dollars. And there’s a lot of it.

…click on the above link to read the rest of the article…

Pound Flash Crashes After Moody’s Downgrades UK To Aa2

Pound Flash Crashes After Moody’s Downgrades UK To Aa2 

In an otherwise boring day, when Theresa May failed to cause any major ripples with her much anticipated Brexit speech, moments ago it was Moody’s turn to stop out countless cable longs, when shortly after the US close, it downgraded the UK from Aa1 to Aa2, outlook stable, causing yet another flash crash in the pound.

As reason for the unexpected downgrade, Moodys cited “the outlook for the UK’s public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government’s fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise.

It also said that fiscal pressures will be exacerbated by the erosion of the UK’s medium-term economic strength that is likely to result from the manner of its departure from the European Union (EU), and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics.

Moody’s now expects growth of just 1% in 2018 following 1.5% this year; doesn’t expect growth to recover to its historic trend rate over coming years. Expects public debt ratio to increase to close to 90% of GDP this year and to reach its peak at close to 93% of GDP only in 2019.

And so, once again, it was poor sterling longs who having gotten through today largely unscathed, were unceremoniously stopped out following yet another flash crash in all GBP pairs.

Full release below:

Moody’s Investors Service, (“Moody’s”) has today downgraded the United Kingdom’s long-term issuer rating to Aa2 from Aa1 and changed the outlook to stable from negative. The UK’s senior unsecured bond rating was also downgraded to Aa2 from Aa1.

The key drivers for the decision to downgrade the UK’s ratings to Aa2 are as follows:

…click on the above link to read the rest of the article…

Angry China Slams Moodys For Using “Inappropriate Methodology”

Angry China Slams Moodys For Using “Inappropriate Methodology”

The market may have long since moved on from Moody’s downgrade of China to A1 from Aa3 (by now even long-only funds have learned that in a world with $18 trillion in excess liquidity, the opinion of Moodys is even more irrelevant), but for Beijing the vendetta is only just starting, and in response to Tuesday’s downgrade, China’s finance ministry accused the rating agency of applying “inappropriate methodology” in downgrading China’s credit rating, saying the firm had overestimated the difficulties faced by the Chinese economy and underestimated the country’s ability to enhance supply-side reforms.

In other words, Moody’s failed to understand that 300% debt/GDP is perfectly normal and that China has a very explicit exit strategy of how to deal with this unprecedented debt load which in every previous occasion in history has led to sovereign default.

The Ministry of Finance reaction came after Moody’s first, and very, very long overdue, downgrade of China since 1989 citing concerns about risks from China’s relentlessly growing debt load as shown below.

“China’s economy started off well this year, which shows that the reforms are working,” the ministry said in a statement on its website.  Actually, it only shows that China had injected a record amount of loans into the economy at the start of the year, and nothing else. And now that the credit impulse is fading, the hangover has arrived.

Moody’s on Wednesday also downgraded the ratings of 26 Chinese government-related non-financial corporate and infrastructure issuers and rated subsidiaries by one notch. It also downgraded the ratings of several domestic banks, including the Agricultural Bank of China Limited’s long-term deposit rating from A1 to A2.  It also eventually downgraded Hong Kong and said credit trends in China will continue to have a significant impact on Hong Kong’s credit profile due to close economic, financial and political ties with the mainland.

…click on the above link to read the rest of the article…

Yuan Tumbles As Moody’s Cuts China’s Credit Rating To A1, Warns “Financial Strength Will Worsen”

Yuan Tumbles As Moody’s Cuts China’s Credit Rating To A1, Warns “Financial Strength Will Worsen”

Offshore Yuan tumbled as Moody’s cut China’s credit rating to A1 from Aa3, saying that the outlook for the country’s financial strength will worsen, with debt rising and economic growth slowing. This leaves the world’s hoped-for reflation engine rated below Estonia, Qatar, and South Korea and on par with Slovakia and Japan.
 “While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government,” the ratings company said in a statement Wednesday.

And the most obvious reaction was Yuan selling…

Full Statement: Moody’s Investors Service has today downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative.

The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government.

The stable outlook reflects our assessment that, at the A1 rating level, risks are balanced. The erosion in China’s credit profile will be gradual and, we expect, eventually contained as reforms deepen. The strengths of its credit profile will allow the sovereign to remain resilient to negative shocks, with GDP growth likely to stay strong compared to other sovereigns, still considerable scope for policy to adapt to support the economy, and a largely closed capital account.

…click on the above link to read the rest of the article…

Spanish Banks Brace for Ultimate Showdown

Spanish Banks Brace for Ultimate Showdown

A bitter, long-simmering conflict finally appears to be reaching its finale in Spain. On one side of the divide are the country’s biggest banks and some of the world’s largest investment funds; on the other are hundreds of thousands of families who lost their homes after the collapse of one of Europe’s biggest ever housing bubbles, together with the many thousands more who face the same fate today or tomorrow.

In Spain, more than in most places, debt stays with you until death do you part; it is never forgiven nor forgotten, and mortgages are “full recourse.” Even when a bank, often with the heavy-handed assistance of the forces of law and order, has repossessed someone’s home, that person could still be left on the hook for thousands, if not hundreds of thousands, of euros of debt.

Most Spanish foreclosure victims end up personally liable for not only much of the outstanding loan, but also thousands of euros in penalty interest charges and tens of thousands of euros in court fees. They can end up owing more than the original mortgage, but with no house to speak of, or live in.

So contentious is the issue of foreclosures in Spain that it sparked a nationwide resistance movement. When a local resident is threatened with eviction, word quickly spreads and groups of neighbors and social activists begin forming and offering their support. By the time police officers arrive there is an almost impenetrable wall of protesters between them and the front door of the property to be foreclosed.

The Rajoy government’s response to this popular movement was to include within its Orwellian-dubbed Citizen Security Law (A.k.a the Gag Law) a clause that made it illegal for people to try to prevent, through passive, non-violent resistance, the forced eviction of a local resident.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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