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How did Spain acquire their debt?
11-19-2012, 02:32 AM
Post: #1
How did Spain acquire their debt?
I am doing a project and I need to understand how Spain acquired so much debt. I know that the housing market played a huge role.
Thank you.

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11-19-2012, 02:41 AM
Post: #2
 
In simple terms, the Spanish Socialist government spent too much money.

There are just too many public works projects and Government employees for the few taxpayers in the private sector to pay for in the current recession.
Autonomous areas have added fuel to the fire. Local gossip says that Garraf county near Barcelona, for example, was policed by 150 Civil Guards and now has 1,500 Autonomous and municipal police to take their place.

Personally I think that they also forgot that Spain was going to lose its net inflow of money from the EU.

Another point is that the same government also had a free immigration policy. The idea was, I suppose, that the Ecuadorians and Moroccans would work in the tourist hotels and restaurants for peanuts. Well that did not happen. Mainly because many of the immigrants do not have the language or social skills required. Most of them are subsistence peasants.
Those with trades, who made their fortunes in the building boom are now unemployed and, in fact, Spain now has negative immigration. More people are leaving than arriving.
The now unemployed immigrants are a great drain on the social and medical services with official unemployment at around 25%! 75% of those using food banks are immigrants who arrived in the last few years.

As for the housing market, Spain has the most overvalued housing market in the world (UK is second) the bubble had to burst. Thousands of flats and houses are unsold but they still will not bring down the prices to attract customers in the believe that this is just an economic blip. The banks, however do not like 10 year blips with no loan money coming in. So they bankrupt the owners and builders, take over the houses and just sit on them in the hope of better days.

There has just been an election and the Socialists are out so the country will survive but there are hard times ahead.

It all makes Spain a great place to visit.

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11-19-2012, 02:41 AM
Post: #3
 
The country lived beyond its means
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