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Mervyn King, Trichet, et. al. were pretty hard on the US when the subprime sh1t hit the fan. I don't know why, since it was obvious they would get splattered with those stinky brown drops as well. Does this sound familiar?

From Bloomberg : Jose Maria Gonzalez is struggling to unload a four-bedroom apartment in Madrid so he can pay for the 480,000-euro ($750,000) house he now lives in. His problem may wind up hurting investors in Rome and Hong Kong he's never met.


 

That's because mortgage-backed bonds issued by Gonzalez's lender are held by funds run by Pacific Investment Management Company LLC and Pioneer Investments. Property appraisal firms, working in the interests of the banks who controlled them, regularly inflated home values, says Josep Prats, a fund manager at Ahorro Corporacion in Madrid. Such assets are behind as much as 320 billion euros of that paper sold to savers worldwide.

Those estimates helped Spanish banks boost lending by supporting the sale of mortgage-backed bonds that fueled Europe's biggest homebuilding boom. The strategy turned sour after the U.S. subprime crisis triggered more than $470 billion in losses and writedowns worldwide. As Spanish assets are reassessed, the country may become a fresh source of losses.

``Valuations aren't realistic,'' says Prats, who heads a team managing about 11 billion euros. ``Valuation companies issue reports for whatever amount the bank managers are prepared to lend.''

There's more of course:

Saving Homes in Spain Means Immigrant Fanny Palacios Works 20 Hours Daily Fanny Palacios didn't sleep at night as she struggled to keep her home near Madrid.

Spaniards Dump Golf, Languid Lunches as Plunging House Prices Sap Economy As a Mercedes-Benz E-Class sedan glides through a security check and uniformed staff straighten deck chairs by an outdoor pool, well-heeled serenity masks the upheaval taking place at Madrid's most exclusive golf club.

Pain in Spain Falls Mainly on Trichet as ECB Accepts Toxic Mortgage Loans Spain's housing collapse is becoming European Central Bank President Jean-Claude Trichet's economic crisis as delinquent home-loans rise amid a slowing economy.

We all know how the UK in general is doing since they've coined the term, "Northern Rock moment", but its worse in Ireland. I announced to the blog last year that I was going move into these European and Asian areas, but there is so much to cover and so little time.

Pound Declines After U.K. Manufacturing Shrinks by the Most in a Decade

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Bloomberg: Jim Kingham says the credit crunch is hurting his Belfast-area moving company more than the violence that ravaged Northern Ireland for 35 years.

Kingham has fired nine of his 12 workers at A1 Shortnotice, based in Newtownards, as house prices plunge and sales dry up.

``You can take me back to the days of the bombings,'' says Kingham, who has run A1 for 40 years. ``Business was better then. Five of my six lorries haven't left the yard for months.''

The credit-market rout is undermining the peace dividend for one of the U.K.'s poorest regions. Northern Ireland's economy is stalling as house prices, which surged as violence came to an end, fall at the fastest rate in the U.K. and building reaches a 12-year low...

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Northern Ireland's economy will grow 1 percent this year and next, less than half the rate in 2007, according to a forecast by Ulster Bank, a unit of Royal Bank of Scotland Group Plc.

The province had expected an economic revival following the restoration of a power-sharing government between Catholics and Protestants last year. The accord settled a conflict that claimed 3,500 lives during a period known as the Troubles.

Leading up to the deal, house prices rose at the fastest pace in Europe, data from the Royal Institute of Chartered Surveyors show. They climbed 79 percent in the two years ending in the second quarter of 2007, according to Nationwide Building Society, the U.K.'s biggest customer-owned lender.

Frenzy Ends

``Properties would go on the market and the same day there was maybe 10 or 20 bids in,'' says Desmond Turley, managing director of Ulster Property Sales in Belfast. ``It was frenzied. Now it's different. The level of interest just isn't there.''

On average, U.K. house prices fell 4 percent in the second quarter from a year earlier, according to Nationwide. In Northern Ireland, prices plunged 19 percent.