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spain

Europe Featured Security and Conflict The International Economy Uncategorized

The New Spanish Housing Crisis

by Ferran Masip-Valls
Contributing Writer

Suppose you purchased a home on a loan in 2005 with an estimated value of $500,000. Fast forward to May 2013 and the home has been devalued to a measly $100,000. Yet, your monthly mortgage payments reflect the initial value of the home and you are no longer able to afford them due to unemployment. Eventually, you must approach the bank and hand over the keys of your apartment, accepting that you are now just another unemployed and homeless Spaniard, amongst hundreds of thousands. Sounds all too familiar for those in similar predicaments living throughout the Western world. According to the current Spanish banking system, after giving back the goods you mortgaged for the loan, you still must pay the remaining sum. For all the previous homeowners, this means the remainder of the “original” value back to the bank—plus interest. This is the all too common scene in Spain: unemployed, homeless, and owing hundreds of thousands to a bank that also owns your apartment.

A key factor in understanding the current housing crisis in Spain is to understand its history. This bubble, that began in 1985, became known as the “Spanish Miracle”: a process that placed a post-dictatorship country with a third world economy into the top ten economies in Europe over a few short years. However, with the bubble-burst in 2008, it became painfully clear that most of the “Spanish Miracle” was just smoke.

When the collapse of an economy is directly related to a basic need, there are always direct consequences for the general population. At the end of 2012, the Land Registry Information Service announced that an eviction happened every 15 minutes throughout Spain, which is outright alarming for a country with less than 50 million inhabitants. According to the National Institute of Statistics of Spain, the Spanish now boast 3.4 million empty houses, 13.7% of the total housing available.

Even after the damaging effects of the mortgage crisis, the Spanish banks continued to provide loans. One must understand that they too had their own assessment and taxation companies that allowed the banks to establish the prices for homes. In short, the banks were encouraging individuals to buy and invest beyond their means. Money has stopped flowing, unemployment has reached astronomic levels (27% in the overall population with 57% of youth unemployed) and the general Spanish population is struggling to pay the unrealistic mortgages. Common sense (and European law) states that when one cannot pay one’s mortgage, one must give the apartment or home that one bought to the bank that issued the loan. The debt is then paid. Nevertheless, in Spain, the banks thought differently.

This irregularity is attributed to the set-up of Spain’s political, legal, and economical forces having the same faces. CEOs and other figures inside the corporate and banking system were politicians beforehand, and vice versa. The same happens within the legal system. This leads to a lot of “friendships”: which in practical terms mean an astonishingly high level of corruption and impunity to certain individuals and private companies. All the while, one out of five Spaniards live below the poverty line.

In response, a gathering of common people who want to take action against those unfair evictions and current circumstances came about: “Plataforma de Afectados por la Hipoteca” – “Platform of those Affected by the Mortgage” (PAH). It is neither politicized nor centralized and it does not have legal status or clear leadership. Separate groups in various cities have been able to gather more than 1.5 million signatures to change the mortgage laws to make evicted people debt-free after eviction. This is a group of dedicated people who advocate for rationally using the estimated 3.44 million empty homes and apartments, now owned by banks, as social rents. Further, the PAH engage in “escarche”: going to a prominent politician’s house who is related with the origin of this problem and putting protest stickers on his door while holding a small demonstration.

The absurdity of it all becomes strikingly clear when observing the People’s Party, who have held the majority in government since the crisis began, and their reactions to such “escarche” movements. This April, Maria Dolores de Cospedal, Secretary of the People’s Party, made accusations such as “escarche is pure Nazism,” “the People’s Party voters would rather go hungry before stopping to pay their mortgages.” Other People’s Party members have gone to the extent of relating the PAH to terrorist groups.

In the streets of Spain, evictions occur every day; however, so do social movements. For example, on April 13, the PAH occupied a brand new, but vacant, 40-apartment building in the city of Sabadell owned by Caixa Penedes (a Spanish bank). The PAH opened its doors to homeless families after employing a selection process to grant homes to those most in need. Shortly after opening its doors, the police arrived and the peaceful occupation came to a screeching halt through an irregular procedure. Initially, one of the PAH’s lawyers was there to provide representation and act as a mediator to smooth the process should the police arrive, and did so when it happened. Everything seemed to proceed as planned. The surprise arrived the following day when two of the PAH’s members learned that they were facing criminal charges. The police also charged the lawyer, a third party, with disobedience and resistance to the authority. The lawyer is now facing trial, with the police seeking to place her behind bars for six months to one year. In defense of the lawyer, stand the PAH members as well as other “formal” organizations such as the Lawyers Guild and the City Council of Sabadell. Housing is currently a pressing issue in Spain—with the unaffordable mortgages and high unemployment, one must question when this social crisis will transform into a mass revolt. On the other hand… Hey! It’s cheaper to buy a house now! So invest, invest, and invest! I’ll lend you the money, because, well, I’m telling you, it has to work, it’s perfect, and it can’t fail!

Then, one wonders, why people in Spain are not happy.

Ferran Masip-Valls is currently living and working in his native Spain. He is a part of the unemployed under 30 crowd, even after having worked on four continents and completed five university degrees. He most recently completed a MA from Teachers College – Columbia University.

May 6, 2013 1 comment

Society and Culture

Spain’s Unity at Risk: Catalan Elections & the Independence Movement

written by thegeneration

by Ferran Masip–Valls
Contributing Writer

One of the most heard slogans during Franco’s dictatorial Regime in Spain was “España: una, grande y libre” (“Spain: one, big and free”). Well, Franco clearly didn’t create a free Spain, and it isn’t a big country per se. What was accomplished least of all was the creation ofone Spain. With several kingdoms and wars, and a relatively recent civil war that led to the actual shape of the country; with five official languages and some unofficial others; there are several Spains in Spain. Some regions have reconciled with the central government through history. But with the actual Spanish and global crisis, and the management of the governments of the last years, the nationalistic feeling has strengthened in other regions. That may be the case of Catalunya (Catalonia), which now seems to be pushing toward its independence from Spain.

This past Sunday, November 25th, the Spanish region of Catalonia held a much-anticipated election after only two years of the right-Catalanist Convergencia i Unió (CiU) party government. The Catalan president, Artur Mas, called the population to the polls with a semi-messianic campaign. He promised strong policies towards a relatively imminent independence from Spain. After such campaigning, everyone, including the opposition, expected strong results for Mas’ CiU. The results, however, displayed something quite different from what Artur Mas, analysts, and media statistics anticipated.

CiU received only 50 out of 135 total seats in the parliament. This is 12 less than the 62 they previously held. The irony is that CiU called for these elections, hoping to gain more than the 68 seats they needed for a majority. Instead, they now have just 30 percent of the votes, while four other parties hold between 12 and 20 percent. Such a colorful Catalan parliament as this forces CiU to negotiate with other political parties, in order to keep governing.

Artur Mas’ peculiar campaign is partially to blame for the results. After several opportunistic movements in 2012, Mas called the Catalan population to the streets on the 11th of September, for the traditional walk for independence on the national day of Catalonia. While expectations were high, the results were overwhelming. More than 1.5 million people strutted through the streets of Barcelona (out of the nearly 7 million Catalans), waving the independence flag and calling for a change.

Two days after the march, Mas called for the anticipated elections to be held on November 25th. Mas’ CiU planned the elections, and the other parties were ill-prepared while the CiU was strong and ready. For the campaign, CiU prepared the above poster where Mas appears in a messianic pose, with the slogan “The Will of a Nation” – assuming the 11th of September demonstrations as a sign of strength. The speeches that Mas held during the two months previous to the election were full of references to how he was leading Catalonia through its independence process; how Spain wasn’t treating Catalonia fairly both at an economical and sociopolitical level, and how CiU was the only option. He was apparently attempting to achieve the impossible, to be “the flag” of independence himself.

Post-election results show two different things. First, and beautifully enough, Catalan people believe more than ever in democracy (around 70 percent voter turnout), and second, they are everything but fools. Mas took the 11th of September demonstration personally – but Catalans weren’t answering Mas’ call, they had a call for themselves. They didn’t buy Mas’ speeches – he may have been a good way through independence, but he was not going to “own” it as he so wished. The speeches of Mas rang clear as those from a CiU who was never openly pro-independence. Mas was just being opportunistic this time. In reality, Mas is a CiU that has increased taxes, applied more cuts in social services than has the Spanish Government that Mas so openly criticizes, and simply overridden common sense. Mas is a CiU that has allowed 30 percent of Catalonia’s children to remain in poverty, while maintaining harmful right-wing policies.

Catalans might have wanted independence, but it was not CiU’s version of it that they sought. CiU’s failure in the polls is now being used by some to prove how the independence movement is not as strong as the million marcher demonstrations had predicted.

But the truth is that the pro-independence feeling, which Mas claimed as his own in order to strengthen his campaign, remains strong and in opposition to him. Mas’ CiU fell from 62 seats in 2010 to 50 seats. Parties with pro-independence referenda on their platforms held only 14 of the total seats in 2010. After the November 2012 election, they represent 87 of the 135 seats. Shared between several parties, the pro-independence seats make up a historical vast majority.

Objectively, this means that a possible referendum and further independence are politically and bureaucratically more difficult than if led by a unique party with a vast majority. Nevertheless, it also means that, when held, and if approved, the independence process and what it implies will be shared between several parties, several colors, from the extreme left to the far right. Now the push through self-determination comes from several parties with different ideals, but not under CiU’s flag. The elongated process looks more difficult, but at least it represents a wider spectrum of the population and is democratically stronger.

This is probably the best way to represent the Catalan population and its diversity – the real “Will of a Nation.”

November 30, 2012 1 comment

Security and Conflict The International Economy Uncategorized

Spain’s Invisible State of Social Turmoil

written by thegeneration

October 15, 2011 in Barcelona, Spain. Photo by the author, Ferran Masip-Valls.

by Ferran Masip–Valls
Contributing Writer

Welcome to Spain, home of siestas, fiesta, sangria and paella; please enjoy our nice weather and good food. Why not? Walking throughout the streets of Madrid they appear as lively places full of people and energy. It is awfully surprising how non-obvious the current situation is. Demonstrations, strikes, and riots have been happening every week somewhere within the country, and have been for quite some time. The current state of disbelief, of no hope in our democracy, these are punctual things, a punctual and self-contained discomfort, and one that an outsider may never notice. One could say that it all started with the 2011 Spanish protests of Spain’s economic crisis, also known as the 15M movement.

Throughout 2011, it became obvious that we were living in some sort of police state. If we understand a police state as a place where the law is used to the extent that it becomes repressive – control through fear of the forces of the law – that it limits the freedoms inherited from the transition to the democracy, then that was the state of 2011.

One must come to the understanding that demonstrations in Spain are followed by hundreds of thousands of protesters, by millions in some cities. With only 45 million inhabitants, reaching a million in any city’s demonstration is not a small achievement. The average age in a given demonstration falls around 40 years of age, including families with children or elders. In other words, the demonstrators are not some random punks but are representative of the average population who are simply saying, “We’ve had enough.” Enough.

And by enough, some people refer to the fallacy, the open insult to democracy. The right-wing “People’s Party,” now in the government, is literally doing the opposite of what its agenda campaigned on and promised (protecting or lowering taxes, preserving social aid, etc. during elections – what people voted for. One could take the current state of affairs, fact check each point of what was promised and what has happened, and it literally comes out as the opposite.

By enough, some others refer to the statistics. As Sabino Cuadra, a member of the Congress stated during one of its sessions, between 1994 and 2007, or the “high development” years in Spain, real salaries rose by only 1.9% (without considering inflation), the average pension rose by only 16.3% and unemployment benefits decreased by 16%. Meanwhile, the gross benefit of major companies rose to 50%, shares and other activities rose to 129% and real estate property to 175%. Therefore, the real growth wasn’t applied to the average population. And that money left the country, which takes us to the next point.

By enough, still others may refer to taxes and financial cuts. Spain is the leader in Europe in tax evasion, doubling the average. According to the Association of Technicians of the Spanish Treasury Department, big companies and wealthy families have taken advantage of these loopholes making up 72% of tax evasion, while 80% of tax inspection disproportionately focuses on workers, small companies, and freelancers. The austerity plans affect the general population, elderly, public health, education, VAT, funds for research and small business, all while new laws are being made to protect big wealth.

Enough of it. Enough of the more than 20% unemployment (50% of unemployment for youth), of having a bizarre mockery of what politics and democracy should be, of being ashamed of how it is all being dealt with, of being the average citizen paying for massive bank bankruptcies and massive private investments. The average citizens of Spain have had enough.

Can the big and wealthy continue to wonder why Spain is on the streets? Can the government continue its misrepresentations?

But now, the police state has disappeared. We have reached a point that dates back to September 25th in Madrid, where a subtle change was too obvious to be ignored. Several hundreds of thousands (once again, families and elders joined together) surrounded the Congress with beautiful and neat signs. “No” was the only message, some even with a “Not Like That” as a slogan. Clean and clear.

After 9:30pm, officially 1,800 anti-riots took place (and civilian videos show how hundreds of others were infiltrated between the demonstrators), with their armored vans and rubber bullets, and started shooting—in the streets, inside cafes and bars, in corners. Apart from the exponential increase of police violence, what changed this time was that after everything was “dispersed,” the police kept going for hours. As an example, the images of how they arrived hours after to Atocha (the biggest station in Madrid), which is nearly a mile away, are horrific. The police started randomly shooting rubber bullets and beating pedestrians and passengers as they randomly arrested citizens, all the while breaking journalists’ cameras. Situations like these relate more to a militarized state. The Government does not need to use the law to expand fear – they use force.

A friend of mine told me “I will keep going, it’s my right to demonstrate. Before, I was scared to end up in jail, to wake up in prison for some months… Now sometimes I literally fear for my life.”

But still, welcome to Spain. Enjoy our nice fiestas, sangrias and paellas – because you won’t see the rest; the sweet and sour mixture between desperation and anger is not obvious enough yet, in the day by day, on the streets.

October 26, 2012 1 comment

Mexico and Latin America The International Economy

Spain’s Labor Markets: The Disregarded Solution of Economic Recovery

written by thegeneration

by Tina Kim

Despite the anti-austerity protests from thousands of unemployed Spaniards in recent months, Spain is moving towards cutting social programs in its most severe austerity budget plan in history in order to receive bailouts for its banks and government debt. Spain is considering to apply for the Enhanced Conditions Credit Line (ECCL), a euro-zone bailout fund that would grant money to Spain’s government with the condition that it imposes more fiscal austerity. More than $50 billion worth of budget cuts in education, healthcare, welfare, and pensions are expected and unemployment benefits and civil servant wages have already frozen.

However, as long as the labor market in Spain remains uncompetitive, Spain has little hope in recovering from its economic crisis in the long term. Restoration of the labor market, rather than its banks and bond market, is what will ultimately bring Spain out of its suffering. With nearly a 25% unemployment rate, Spain is making a serious mistake in cutting the social programs that are the lifeline of thousands of unemployed people. Moreover, borrowing money from the rest of the world to grant these bailouts to banks does not consider the future of its youth in the job market. According to the Wall Street Journal, “workers ages 16 to 24 face an astronomical 53.3% unemployment rate and for 25- to 34-year-olds, the rate is 27%.”

UCLA Economics Professor Aaron Tornell explains that high unemployment in Spain’s youth is due to a situation of “insiders” and “outsiders.”

“An insider is someone who is ensured a job for life; many insiders are union members,” said Dr. Tornell. “An outsider, particularly a young person, is someone who will not have a job regardless of whether the person is educated or not. The power of unions is protecting the insiders from getting fired. In order to fix unemployment, you have to weaken the power of the unions to make sure companies can hire younger, more productive people.”

Another problem that the Spanish youth faces stems from the housing bubble that burst in 2008. When Spain joined the euro in 1999, low interest rates brought banks to lend an unprecedented number of property loans and the boom years of this period caused wages to rise quickly within the labor market. As a result, Spain has been exporting less of its own, more expensive goods and importing more of cheaper products from its European counterparts. This trend resulted in Spain’s government overspending, but more importantly, Spain’s labor market became highly uncompetitive.

In the long term, giving salvation only to banks with bailouts all the while punishing the Spanish people through austerity measures serves in no interest of the Spanish people, government, or even banks. Nobel Peace Prize Laureate in Economics, Paul Krugman wrote in a New York Times op-ed article that fiscal austerity in Spain’s current economic state is simply, “just insane.”

“Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression,” said Mr. Krugman. “And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even worked as a way to reduce borrowing costs.”

However, the general trend throughout the world, not just in Spain, has been that bailing out banks has preceded the need to support social programs. The banking system has become monopolized so that banks are too large to fail when they are in trouble. Smaller banks around the world have merged together into larger banks in order to increase their assets to a point where defaults in these banks can risk a financial collapse. In addition, the risk of having these banks default could lead to a greater catastrophe of foreign investors pulling out their money from banks and government bonds. No investments cause reserves of banks to shrink, which would in turn increase interest rates and stiffen lending to consumers. Therefore, the banking system has become so essential to capital of the economy that bailouts have become the insurance banks can rely on when their loans are in trouble.

As a prime example, Spain’s government is applying for an ECCL to bring foreign investors, or at least keep the ones it already has, and maintain its credibility to repay debt. Moreover, if there are no foreign investors, there is a risk that Spain will default on its loans to France and Germany, which can spread Spain’s economic crisis into an epidemic throughout Europe. Consequently, further downgrades of Spain’s bonds—which are currently one notch above junk status according to Moody’s and Standard and Poor’s—will not only drive foreign investors further away from its bond market, but also bring other European Union countries down with it.

For these reasons, although banks are responsible for the housing bubble, they will receive the aid that they need even though austerity measures will make taxpayers’ lives harder. Since big banks are nearly guaranteed bailouts, there are no incentives to prevent banks from issuing out risky loans when the economy recovers and interest rates are low again. But for how long can this vicious cycle last? Already there are violent protests of hundreds of thousands all around the world. If governments wish to ensure the future of its citizens, the cries of the poor, young, and unemployed must be heard.

A strong, competitive labor market is what will bring revenue and ultimately restore the economy. Spain can start with not cutting social programs that are the support systems for the thousands of unemployed and struggling citizens. Secondly, laws must be set in place to prevent unions from not hiring the unemployed youth in Spain. Thirdly, although bailouts must be administered, social programs should take priority before banks are given aid. Finally, there must be laws or a set of incentives that will prevent banks from giving out such toxic loans that start such housing bubbles and financial crises. The people of Spain have been hurting long enough and it is time the government supports and invests in the people who can restore the economy for what it once was.

Tina Kim is a second year Communications major and Public Policy and Urban Planning double minor. She is a co-editor and writer for The Generation.

October 23, 2012 1 comment

Society and Culture

Bullfighting in a Hostile Age

written by David Taylor

By Kitty Wittwer

Bullfighting should never have lasted this long. But somehow it has. It has been around for a very long time, defying political correctness, outlasting the kings and popes who tried to prohibit it, and surviving a three year civil war that temporarily brought it to a halt. In 2011, the people of Spain – or at least, some of the people in the Northeastern part of Spain – spoke, and the ancient ritual of the Fiesta Brava was legally banned in the region of Catalunia. The ban went into effect Jan1, 2012. For now, it is contained in Catalonia, but there is a hope that it will one day include Spain in its entirety, although that is not a likely scenario.

They are strong and standard arguments for the legitimacy of Spain’s national fiesta, based on the artistic, historic, cultural and even educational merits of the spectacle. Those opposed, never seem to grasp what the fiesta is really about, but, instead, cling to the belief that bullfights are about the torture of animals. There is never a clear winner to these arguments. To be sure, the torture of animals is barbaric and archaic, but that is not the point of the bullfight. It is not a sport or a competition. It is not about cruelty or torture.

Yes, animals are killed, but killing and torture are two different things. Bulls are bred to be killed, but they are never meant to be tortured. The people who stand firm on the cruelty argument have usually never see a corrida, and are missing the point, or, at least, the full picture. To say that bullfighters are animal torturers is like saying that Michaelangleo was a ceiling painter.

The toro bravo, or fighting bull, is a wild beast, not capable of domestication, nor is it an endangered species. It is raised on large ranches in open country, and protected, fed, and cared for by experienced ranch hands. In fact, what is preserving the breed is the bullfight itself. Without the fiesta, there would be no need to cultivate and propagate this animal on the 500 or so bull ranches throughout Spain. It takes significant manpower to run these ranches, and that means jobs.

Of the many reasons to support the bullfight, one is purely practical, the economic one. The fiesta brava employs armies of people. At a time when the unemployment rate in Spain is, by some accounts, as much as 25% it is perhaps unwise to tamper with the livelihoods of those people who depend directly or indirectly on the bullfight for their daily bread.

No matador enters the bullring alone. He is accompanied by his cuadrilla (a team of 5 men), and supported by an infrastructure composed of empresarios and managers, sword makers and sword handlers, vendors and ticket takers, printers, photographers, poster artists, butchers, veterinarians, bull breeders, critics, TV crews and on and on, not to mention all those tourists in cities like Pamplona who have to eat, sleep and drink somewhere.

The fiesta is a multi-million euro enterprise, whose economic effects touch aficionados and non-aficionados alike. Fernando and Lucrecia, owners of the Jamon Real, a popular taurine bar / restaurant, one block from the bullring, in Seville don’t like bullfights, and never go; yet they are horrified by the possibility of a nationwide ban, because so much of their business depends on the bullfight.

Given the routine violence of the times we live in, bullfighting seems quite tame by contrast. What shows up on the news and in movies is far harsher and more brutal than anything I’ve ever seen in a bullring. Bullfighting is not for everyone to be sure. And if that’s how you feel, don’t go.

And here’s a curious footnote to the ban: In the lead up to what was to be the very last corrida held in Barcelona’s Plaza Monumental, scalpers were charging monumental prices, and the box office was overrun with requests for tickets, even though this barbaric practice had lost its support in Catalonia. On September 25, 2011, in the Catalan capitol, the final corrida ever to be presented in its last existing bull-ring (the city had once boasted three), took place in a jam packed arena. The plaza was sold out.

March 3, 2012 9 comments