Spain: A Spiral of Crisis, Cuts and Indignacion

Luke Stobart and Joel Sans

In March 2011 several regular Guardian columnists analysed the crisis in the Spanish state and the response to "austerity" by the population. All agreed that young people were "apathetic" and even "docile." Two months later that same youth led tens of thousands to occupy city squares and a million to demonstrate across the country -- the movement of "the outraged" (los indignados in Spanish). Actually the journalists were not wholly wrong: at the time of writing there had been a limited fightback and the consensus across Spain was that people were apathetic.

The immediate cause of the current global crisis was generalized property and financial bubbles in the developed world. Spain was an extreme case of this, with a million housing start-ups taking place in 2007 (more than in Britain, France and Germany combined). This generated massive profits for construction companies and banks which invested heavily internationally (including buying airports and high street banks in Britain). Rising house prices fuelled consumer spending, while half of the jobs then being created in the EU were in the Spanish state.

When this mega-bubble burst -- coinciding with the international credit freeze, building literally stopped overnight. In December 2008 only one single house was built in the whole of Spain! Loans of hundreds of billions of euros by regional banks (known as ‘cajas’) to estate agents and construction firms turned ‘bad’ and, when recession led to mass unemployment, the banks cruelly evicted hundreds of thousands from their homes leaving them with a mountain of properties they would never sell.

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