When people from the richer, northern parts of Europe complain about problematic situations in Spain, Spanish residents retort “Well, at least we have sun and you don’t”. However, the warm sun neither feeds the unemployed Spaniards nor solves the issue of the Spanish recession, but for some reason it seems to have a calming affect on the Spanish people, an assurance that things will turn out all right no matter what the rest of the world may argue.
The origin of the Spanish credit crisis can be found the early 2000s when Spain had just entered the European Union. Through unity with other European countries and the introduction of the Euro, cheap credit became available to Spain. Interest rates fell from 14% to 4% within days of the Spanish entrance in the European monetary union as financial markets fell prey to the promise that properties would never drop in value. Spanish savings- and commercial banks were supported financially by German banks, and this new market made Spain rich – for a while. But instead of using these loans to finance long-term investment, much credit ended up invested in the construction sector. The construction boom was, however, not conducive to sustainable growth in the long run but rather created a bubble.
As is easy to predict in retrospect, the bubble burst and the result has filled the Spanish landscape with the skeletons of hundreds of unfinished houses, millions of unsold properties, a youth unemployment rate of 50% and a total of 4.7 million people unemployed. The liquidity injected into the Spanish economy has so far been earmarked for government bonds with the object being to get the Spanish economy to start spinning again, and to ease Spain’s debt burden. This has on the other hand made it almost impossible for a company or a private borrower to get a loan due to the priority order starting with the government.
Spain’s fragile economy is affecting the rest of Europe in a far greater way than Greece because it is a much larger economy and more integrated with the other countries in the union. Another difference is that the crisis in Spain lies mostly in the private sector, not in the public as in Greece. With the switch from a social democratic to a liberal-conservative government in 2011, Spain hoped brighter times would come. The new government’s policies have included tax increases and cuts in public expenditure designed to help reduce Spanish debt. In a press release from the government’s web page President Mario Rajoy stated that these planned reforms of increased taxes and cuts are designed to boost Spain’s economy towards a more dynamic and competitive one. His policies have, however, been met with a lot of demonstrations, some of which have even turned violent. The organization 15M, established the 15th of May 2011 is one of the biggest national movements against the reforms.
Even on a regional level the frustration at reforms, cuts to public spending and enduring unemployment has been expressed. The National day of Catalonia, La Diada, that takes place on the 11th of September was transformed into an enormous manifestation in support of Catalonian independence. These anti-Madrid protests featured numbers totaling more than half the population of Barcelona. Catalonians protested against the fact that much of the money they pay in tax to the national treasury gets redistributed to poorer regions of Spain. This is money that the Catalans argue would do better within the region to prevent Catalonia from going under.
But even though the crisis is slowly suffocating the Spanish economy, to the casual observer the Spanish seem able to take it all with tranquility. Indeed they have peculiar ways of saving money like saving fried oil and reusing it, keeping old waste bags for new rubbish as well as more normal tightening of their belts with spending on retail falling. Nevertheless, the Spanish street life with botellones (drinking in the streets), eating in tapas restaurants, and going out for a “fiesta” are still prioritised and the streets are as alive as ever. Despite the economic chaos around them, the strength of the Spanish culture seems enduring, and they have yet to give up on socializing and having a good time in the sun.
The crisis debate may bore people from around Europe to death but not young Spaniards. On the contrary, they enthusiastically state their version of the crisis whether hopeful, indifferent or angry. And although everyone seems to know a friend that has left Spain to find luck and employment abroad, they tend not to speak of the future as dark and hopeless. Could this be a sign of the stereotypical Spanish “mañana-mañana” mentality that claims that Spaniards tend to postpone tough matters to tomorrow and just enjoy the good things of life in the present? Perhaps, but right now the positive mentality of the Spaniards may be one of the keys to getting Spain out of recession. The last thing Spain needs right now is panic. A run on a Spanish bank or severe capital flight would only destabilize the economy further. Difficult times are not something new to Spain, after all the nation survived 40 years of dictatorship. With a bit of the “a joderse y aguantarse” mentality (to be screwed and to endure) the nation can reach brighter times again. As scribbled on the Bullfighting arena in Alicante: “La tortura es cultura” (the torture is culture) and is not only something describing the suffering bull – it just as much describes the fighting spirit of a Spaniard.