Panic selling of shares predicts a deep recession starting on the Spanish Costas.

"Spain is going to face the very direst of economic circumstances: a cycle of recession, deflation and widespread private sector default - a depression in fact. This stock market slide is not just a 'correction'. It has a very, very, long way to go."

Panic selling of shares in Spain's big five real estate companies has seen their value tumble over the past seven days. Meanwhile, after a decade in which prices rose by 270%, house prices in Spain have been sluggish since the end of 2007, with reports that developers are cutting prices in popular coastal areas.
General Electric has withdrawn its interest, for the time being, in the take over of the second largest real estate business in Spain, Colonial. Latest reports indicate that another offer for Colonial could come from the United Arab Emirates following reports that the Colonial books have been opened to an investment arm of the Dubai Government, the ICD, the Investment Corporation of Dubai.
Trading on Colonial was suspended in Madrid for a time, and the shares fell slightly when trading resumed just before noon.
It seems that General Electric dropped out of the take over race when they could not agree on the terms of a confidentiality agreement with Colonial ahead of inspecting its books. GE say they are keeping the door open to a ‘possible future interest’.
The President of the Junta de Andalucía, Manuel Chaves, has today revealed conversations on the possible merger of the Andalucian Savings Banks. ‘A grand Andalucian Savings Bank is on the way’ he said, confirming multilateral conversations intended to merge all the savings banks which are based in the region. Chaves gave the news as part of his election manifesto for re-election at the poll which will be held on the same day as the General Election on March 9. Chaves said that the important thing was that an Andalucian Savings Bank be competitive both inside and outside the region.
La Caixa savings bank has announced profits down 17.8% in 2007 at 2.488 billion. President of the company, Isidro Fainé, admitted that such a ‘tragic correction’ had not been seen for several years.
The fall in profits comes though after the exceptional year in 2006 when the bank sold off its interests in Colonial real estate.Spain could now find itself facing a monetary squeeze just as the economy swings from boom to bust, more or less the fate suffered by Britain in the ERM debacle of 1992, except that Spain has no way out.
Bernard Connolly, global strategist for Banque AIG and former head of economic research for the European Commission, said the country will face a brutal adjustment over the next two years - if it can remain in the euro a