Spain is crying
The rating agencies are slowly realizing the health of the Spanish economy. The Trader has been arguing for more than a year, Spain is in trouble, and these cuts should have come much earlier. The deeply rooted problems will now go into the second phase. If the Spaniards start feeling “abandoned” by Merkel & Co, and no credible solution are presented shortly, the Iberian Peninsula will be on fire. “People will stop complaining and start protesting for real”. Look for a hot and dry Spanish summer. Must read by BBC.
One in four adults is unemployed. Half of all young people are jobless. Consumer spending is in freefall and the country has just learned that to save a single, relatively minor bank, will add a third to its already sky-high national debt. Meanwhile its top 30 listed companies have lost 40% of their market value in a year.
Spain is in trouble, on the face of it, because its small banks – known as cajas – fuelled an insane property boom that went bust. They didn’t do complex structured finance deals like Lehman Brothers; indeed they were the opposite of “Anglo-Saxon” capitalism – being small and locally owned.
But behind the pure economic story is a more complex political-economic crisis that could, even now, send Spain the same way as Greece, shattering the eurozone in the process and placing the whole European project in grave doubt.
You can see how badly the crisis has hit people at the “Utopia” apartment block in Seville. It’s a modern, newly-built, five-storey complex next to a busy road. The flats are small: perfect for young professionals with their taste for minimalist furniture. But the company that built the flats went bust and now the whole place has been squatted by families turfed out of their own homes due to repossession.
Toni Rodriquez leads me around the darkened corridors (the electricity company has cut the power supply).
“We had weekly meetings for four months and we realised we were all in the same situation and finally we decided to do something about it. When we took over the building I was frightened, because I’ve seen things on TV where they drag people out. The banks need to adapt the mortgage system to avoid kicking people out of their homes.”
Toni, aged 44, is one of a tight group of women – mainly cleaning workers – who’ve organised the occupation. They all have working age children who are unemployed. They resent the banks for kicking them out of their homes, and the politicians for bailing them out.
Full article here.