EDITION: December '08 - February '09


Hope is the last thing we should lose
World economies, particularly the financial and real estate systems of certain countries, are purging the excesses of the last years provoked by an excessively lax monetary policy and the ease with which loans were handed out.

The interventions and measures adopted by the leading governments of the world, though late and subject to modifications, are sufficient, and according to the International Monetary Fund, global recovery could come after next summer. The stock markets could hit rock bottom before the end of the year, until then the fear of global recession is threatening investors, and we could live through moments of stock exchange panic (which I reckon is the perfect moment for long term investments, since right now the stock market does not discriminate between good and bad companies, they all drop).

In Spain this recovery will take longer, since the driving force of our economy these last years – the real estate and construction sectors – has collapsed. On top of which we are not immune to the worldwide financial crisis in which we are living. In the short run unemployment will rise, business activity and consumption will weaken and we will continue to be threatened by bad economical news. Our country will suffer more to get out of this

crisis, as the real estate bubble financed by mortgages has put Spanish families in debt and cancelled out their savings and consumption power.

Our government needs to increase public investment – a mediocre 4% of the GDP according to the General State Budget – and forget about the inflationist effects of the second round. The moment of truth has arrived for Mr. Zapatero’s government; they cannot and should not continue believing that time fixes everything (which brings to mind the agenda of Franco, it was split in two parts, what time had fixed and what time would fix). The government urgently needs to approve powerful measures (on fiscal policies and public investment). They should not forget that they belong to a party that calls itself socialist, due to which the Spanish society would not reproach the government for an excess of interventionism, rather the opposite.

These days various commentaries and news about the economy of a marked apocalyptic nature are being heard and published. Remember that bad news is an investor’s best ally, since it allows us to buy at bargain prices. During the 20th century we have lived through various wars including two world wars and a civil war, the Great Depression of 29, various

recessions and stock exchange panics, the fuel crisis’ of 1973 and 1979. Despite all these problems an investment in American stocks of $1000 in 1900 turned into $260,000 at the end of the century (1999). During which time the Dow Jones went from 66 points to 11,500 points (see graphic chart, page 26). If anyone doubts recovery they should ask their parents and grandparents how they lived in those times and think about how we live now (though it is true, in some cases, above our needs).

“YES, WE CAN”, says the elected president of the United States, Mr. Barack Obama, the people of Spain also say “We can”, but the truth is that we need the help of our government.

En San José, a 5 de noviembre de 2008

Tomás Rocamora Jaén – Rocamora Asesores
- Asesor Financiero y Fiscal
- European Financial Advisor
- Asesor de la Propiedad Inmobiliaria
- Member of European Financial Planning Association
Tel. 971 800 500