Spain is different! This was the slogan that the Western Roman province of Hispania used back in the 1980s to sell itself to tourists, and one of the few English phrases that many Spaniards use to explain the kafkaesque, byzantine or simply bizarre: Espain ees deeferent!
There is a lot of truth is those three words. The Iberian differential factor manifests in various ways, two of which stand out as being particularly unique to the native setting: chronically high unemployment and the real estate madness that has led to 700 thousand new homes sitting empty and unsold because the bubble has burst, the credit has dried up and the youth don’t have jobs. That’s enough homes to accomodate the country’s next 10 year’s worth of natural demographic growth, sitting there losing value every passing day. How did things get so far out of hand?
At the heart of the Spanish Real Estate Bubble (1998-2008 RIP) there was a confluence of various factors and interests: the native obsession with home ownership combined with low mortgage rates on one hand, and the fabulous profits for constructors and banksters on the other. In between, an entire politico class bought and sold with the loose change to engage in wholesale fraud to approve massive developments in the middle of nowhere and without access to basic utilities; and two administrations, the first complicit and the second hapless, and thus complicit as well.
Maybe the bubble would have expanded to less exaggerated proportions if there hadn’t been so many Spaniards willing to sign a 40-year sentence to a bank to finance a 300,000 Euro, 55 square meter apartment, with no money down and adjustable rate, as recently as 2007. Having been a renter through the entire bubble, I can testify that the dominant mindframe at that time was that renting was just tossing money down the toilet because a mortgage cost the same as a rent and the property BELONGED to you. Well, both of these arguments have been disproven by reality, the first by the hike in morgtage rates and the second in the form of a clause in the paper you signed with the bank that says that you can be evicted from “your” property and still be liable for FULL remaining debt.
I’m still renting, but believe me, I ain’t smirking. There are a LOT of people in the hurt right now, in every walk of life, except for the motherfcking banksters and their enablers. I have friends, acquaintances and colleagues who are suffering to keep afloat under heavy mortgages, terrified of losing their jobs and their homes and trying to “put a good face to the bad weather”, as they say here. And many of them still have a decade or two left of payments on their homes… it is a very bleak horizon and one of the main reasons behind the 15-M “Indignant Ones” movement.
The Spanish Constitution says that all Spaniards have the right to a decent home, but successive administrations have taken this particular clause to mean that the slaves have the right to chain themselves to 600 square feet of bricks and mortar for the duration of their productive years. Spain’s economy has ground to a halt because all the money is tied up in the real estate. The country has the highest rate of personal debt in the EU, all mortgaged in their homes, while a vast surplus of unsold real estate sits clogging the market and nobody seems to know what to do about it. The complicit government has refused to let people walk away from their mortgages because it would be “bad for the financial sector”, and has instead offered a 4% discount on VAT for buying new homes… another tax break for the rich, who are the only ones buying right now. And so it goes, on and on…
Because I feel the moral obligation to find a silver lining to every cloud, as they say here “no hay mal que por bien no venga“, here it is: there’s nothing like waking up naked with carpet burns on your knees and a used condom hanging out your asset to realize that the party is over & was on you. It’s a rude awakening, but it’s better than not waking at all. Selah!
The most clarifying explanation of the Spanish real estate crisis to be found, brainchild of talented Catalan cartoonist Aleix Saló: Spainistan, with English subtitles. Wicked!