If where you live has been hit hard by the recessive economy, just think about people in Spain for a spell. People there are preparing for yet another recession as six million Spaniards sit out of work with not even a ray of hope in sight. Accordingly, the property market in Spain is absolutely saturated with supply, and little or no demand.
While speculators and normal investors have rescued a part of the property sector in Spain, toxic assets owned by banks are virtually impossible to unload. While the government reels underneath the weight of criticisms over such issues as 57% of the youth of the country being jobless, the banking and business sector hurt even more clinically. As a sign of the business times in Spain right now, once profitable Bankia registered a record 19.2 billion euro loss for 2012.
In what is seen by some as a desperation fire sale of bonds, Spain’s leadership is pretty much pulling out all stops trying to effect a reversal of fortunes. In increasing the maturity date for bond debt, this latest sale of Spanish potential does look better on the books, but down in the country, where the people live, despair is the flavor of every day. Over 26% of the working population stand in unemployment lines as I type this report.
And the misery people in Spain are feeling was in large part caused by a Wall Street – like property bubble that saw prices climb 200% from 1996 to 2007. Then the same sort of hell America felt, was unleashed on a country far less capable of curing itself than the US. Fully one third of the houses built to satisfy the boom for property there are currently uninhabited – red ink on the books of dozens of banks.
The situation in Spain actually resembles something from a Hollywood SciFi flick. Whole towns have become the Spanish equivalents of ghost towns of the American West. The reality of so called “ghost airports” even exits where the speculation over the housing bubble led investors to actually begin construction of hubs like Ciudad Real Central Airport, which now sits like a €1.1 billion euro deserted albatross hanging about the neck of the country.
Then there’s Castellón-Costa Azahar Airport, yet another lonely reminder of Spain’s current plight. That airport even has a monument to misery, the $375,000, 24 meter tall statue of Carlos Fabra (top image). To add insult to injury there, Fabra is a politician under investigation for corruption and tax evasion.
The stresses caused by all this strife threaten to tear the country apart actually. Some suggest Catalonia would be far better off as a separate nation, for instance. The trend going forward from today, it just simply does not look positive.
All the economic folly of the last few years has hit Spain, perhaps hardest of all the EU countries, like a bolt from out of the blue. The loss of over 800,000 jobs in a country of only 47 million, the equivalent in the US would be losing almost 5 million additional jobs in the same span. And this with no funds to prop up the long term unemployed.
Good Notes to End On
Even still, crooked politician news to greedy speculator stories, incompetent banks, austere EU Commission and World Bank obtuseness, there’s a factor in all this news even the world’s greatest economist cannot fathom. Dead broke and SOL as they say, the heart of the Spanish people is something we can all admire. I leave you with a bright ray of sunshine, characteristic of that place in the Southwest of Europe. A little sweet serenade that took place at a Madrid unemployment office is captured in video below. I know, as sure as I am typing this, the sun will shine on Spain again – probably not due to a banker though.