9 Reasons Why Spain Is A Dead Economy Walking

Published on 06/07/2010 in Facts About Spain

So will the EU step up and bail out Spain? Well, there are rumors that EU officials have begun work on a bailout package for Spain which is likely to run into the hundreds of billions of dollars, but last month the European Commission, the Spanish government and the German government all denied that the European Union was preparing a bailout for the Spanish economy.

Zapatero Mr Bean impressionOf course we all know that politicians don't always tell us the truth.

So who knows what is going on over there right now.

But the reality is that the economy of Spain is not going to make it much longer without serious help, and some EU officials are already using apocalyptic language to describe what an economic collapse in Spain would mean.

For example, EU Commission President Jose Manuel Barroso recently warned that democracy could completely collapse in Greece, Spain and Portugal unless urgent action is taken to tackle the burgeoning European debt crisis.

So could democracy actually fail in those nations?

Well, considering the fact that Greece, Spain and Portugal only became democracies in the 1970s, and that all three of those countries have a history of military coups, such a scenario is not that far-fetched.

Without a doubt there would be serious public unrest in those nations if public services collapsed because their governments ran out of money.

So are there signs that the economy of Spain is about to collapse?

Well, yes, there are quite a few of them.

The following are 9 reasons why Spain is a dead economy walking....

#1) Even before this most recent crisis, unemployment in Spain was approaching Great Depression levels. Spain now has the highest unemployment rate in the entire European Union. More than 20 percent of working age Spaniards were unemployed during the first quarter of 2010. If people aren't working they can't pay taxes and they can't provide for their families.

#2) In an effort to stimulate the economy, Spain's socialist government has been spending unprecedented amounts of money and that skyrocketed the government budget deficit to a stunning 11.4 percent of GDP in 2009. That is completely unsustainable by any definition.

#3) The total of all public and private debt in Spain has now reached 270 percent of GDP.

#4) The Spanish government has accumulated way more debt than it can possibly handle, and this has forced two international ratings agencies, Fitch and Standard & Poor's, to lower Spain's long-term sovereign credit rating. These downgrades are making it much more expensive for Spain to finance its debt at a time when they simply can't afford to pay more interest on their debt.

#5) There are 1.6 million unsold properties in Spain. That is six times the level per capita in the United States. Considering how bad the U.S. real estate market is, that statistic is incredibly alarming.

#6) The new "green economy" in Spain has been a total flop. Socialist leaders promised that implementing hardcore restrictions on carbon emissions and forcing the nation over to a "green economy" would result in a flood of "green jobs". But that simply did not happen. In fact, a leaked internal assessment produced by the government of Spain reveals that the "green economy" has been an absolute economic nightmare for that nation. Energy prices have skyrocketed in Spain and the new "green economy" in that nation has actually lost more than two jobs for every job that it has created. But Spain so far seems unwilling to undo all of the crazy regulations that they have implemented.

#7) Spain's national debt is so onerous that they are now caught in a debt spiral where anything they do will harm the economy. If they cut government expenditures in an effort to get debt under control it will devastate economic growth and crush badly needed tax revenues. But if the Spanish government keeps borrowing money their credit rating will continue to decline and they will almost certainly default. The truth is that the Spanish government is caught in a "no win" situation.

#8) But even now the IMF is projecting that the Spanish economy is going nowhere fast. The International Monetary Fund says there will be no positive GDP growth in Spain until 2011, at which point it will still be below one percent. As bleak as that forecast is, many analysts believe that it is way too optimistic considering the fact that Spain's economy declined by about 3.6 percent in 2009 and things are rapidly getting worse.

#9) The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pay cuts, budget cuts to social programs and hefty tax increases easily. In fact, there is likely to be some very serious social unrest before all of this is said and done. On May 21st, thousands of public sector workers took to the streets of Spain to protest the government's austerity plan. But that was only an appetizer. Spain's two main unions are calling for a major one day general strike to protest the government's planned reforms of the country's labor market.

The truth is that financial shock therapy does not go down very well in highly socialized nations such as Greece and Spain. In fact, the austerity measures that Spain has been pressured to implement by the IMF have proven so unpopular that many are now projecting that Spain's socialist government will be forced to call early elections.

Written by: Jimmy D

About the author:

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Comments:

john said:
06 January 2013 @ 14:24

Oi, Wake up. We have problems here and you fall asleep?


Ian said:
07 September 2010 @ 13:17

Jimmy no surname, that`s all i`m saying :D


James said:
06 September 2010 @ 23:35

"You only live once so live the dream."
Unfortunately the dream has turned into a nightmare for many already, and many more will be going the same way. Dream on, Jean, keep whistling in the dark! ;-)



Jean said:
08 July 2010 @ 01:02

Spain is still a great place to live, the property is cheaper than the UK. You can get a 2 bed town house walking distance to the sea for about 90k. appartments from 65k. even a 2 bed detached villa for 120k...!! The Spanish way of life is more relaxed. Ive lived here for 11 years and met many happy people living here. If your coming to retire, the job situation is not going to affect you! Enjoy life. regretting things you have done is better than regretting not doing it. You only live once so live the dream.


rob in madrid said:
07 July 2010 @ 23:01

Doedoe, you can avoid all those problems by renting, leave the landlord with all those problems.

Depending on the location renting can be much cheaper.



Doedoe said:
07 July 2010 @ 11:44

I feel most of the problems in Spain are with the poor control by the ruling government which have the power to control the Builder, Notary, Lawyer, Estate Agent and the Administrator, The Administrator is often appointed by the builder to lead the purchaser into a minefield of non-information. Despite all the research before purchasing, a purchaser trust's the Lawyer to give them good service. Many lawyers fail and take the money without giving the purchaser the correct information.
The local Town Hall in Spanish Villages change direction every day. The problems that purchasers of property have with obtaining Habitation Certificates is esculated because of poor control with these so called professional's.
When complaining to the Lawyer after completion, that the builder has ceased trading and not completed the build because of huge debts, I was told "you did not ask"?
Are Lawyers all tarred with the same brush.
Beware all you new purchasers, don't rely on your Lawyer to do the searches we expect from the list of services they have supplied befor you employed them. They Are Not controlled by the laws the Administrator will flout when he feels the need.
Horizontal Law is his bible but often he will not abide by it.

Despite not having our Habitation certificate after two & half years, I still love Spain and dream of the time when we are able to relax & enjoy the super apartment we purchased after retirement. I just hope that now we are 69 years old we will live to enjoy our dream even though we have several worries over unfinished work & debts of the builder.
The Builder like many others is still trading but under a different name yet he owes our complex thousand. He is allowed break the law yet he has many other building companies that are thriving. How long will it take to take this Builder to court ?? many years.
WARNING to all purchasers Check & Double Check.
Perhaps take out an insurance which could protect the purchase of a property ? I don't know if any Good Insurance company would have this type of insurance for sale, I did not feel the need when we purchased our super apartment. GOOD LUCK.



Pat Roberts said:
07 July 2010 @ 01:16

Hi Vikki
We have a really nice 2 bed apartment in coastal Aguadulce , near Roquetas and Almeria, southern Spain
My husband has not been well so can no longer travel, we are therefore looking for a reliable honest tenant for 3,6 or 11 months at a very reasonable rental.
If you are interested our email is billpatroberts@hotmail.co.uk



Vikki said:
06 July 2010 @ 22:27

Thanks Rob for your advice, a great idea which l had completely overlooked, no estate agent had even suggested this to me/


Rob in bubble busted land Madrid said:
06 July 2010 @ 22:23

Not my comment but worth repeating (sorry copied and pasted too much)

I fear there will be real social problems in the coming decade all over Spain as the depression really bites. We're only a generation or so from what was a police state here and people don't really know how to handle wayward youth, I guess, because they've never really had to. The 'family unit' was strong enough to hold people together and a sense serving your community was always there. That element is slowly disintegrating. Parents (25 to 50) are realising they're in a real debt trap, where they've been ripped off with vastly overpriced, poorly built accommodation that has been planned and constructed way too densely (purely for the profit of constructors, at the expense of any quality of life for the people living there afterwards). These edge of town concrete tenements are precicely what northern Europe have bee pulling down for years, after being identified as a social experiment gone wrong. Even with its advantage of seeing this trend elsewhere, as Spain was playing catch up with the rest of developed Europe, they've still made this mistake themselves - with greed and corruption within construction and planning circles simply being too powerful a force. Kids like these probably fall within that trap, as do a massive percentage of Spaniards now. Repulsive though this kind of act is, I fear there will be plenty more lashing-out and release of frustrations in the years to come, and probably not just towards the traditional target - poor bulls.


Read more: http://www.typicallyspanish.com/news/publish/article_26304.shtml#ixzz0sw36DeBW



Rob in bubble busted land Madrid said:
06 July 2010 @ 22:21

Not my comment but worth repeating





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Six arrests in Alhaurín el Grande following bullrunning torture
larger | smaller
By h.b. - Jun 4, 2010 - 2:49 PM

Photo taken from Público video
The events at the end of the town fair have brought national publicity and condemnation in Spain

Following the outcry following the video evidence of youngsters taunting and torturing two young bulls in the bullring in Alhaurín el Grande at the end of the town’s feria last Sunday, the Guardia Civil has used the same video evidence and carried out six arrests and identified some six more who took part.

The Defensor del Ciudadano in the Málaga Diputación, Francisco Gutiérrez, has received hundreds of complaints from the public following the publicity the case has generated, and on Typically Spanish a host of comments (here) even had tourists saying they would not return to Spain again.

The video shows how a group of youngsters, thought to be drunk at the time, taunt and beat the animal, with the Andaluz collective against Animal and Environmental ill-treatment claiming that the young bull was so injured it had to be sacrificed.

All those arrested were taken to the civil guard barracks to be read their rights and told they were possibly facing animal cruelty charges. All were released after statements were taken, and now it is up to the Prosecutors’ Office to decide whether to proceed with the case.

The Partido Popular Mayor of Alhaurín el Grande, Juan Martín Serón, said that he would be cancelling the bullrunning event in future fairs, but claimed also that more youngsters jumped into the ring to try and save the animal’s life. He claimed that only a minority behaved badly and went as far as to say the animal was injured by running head on into another bull.

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Readers' comments:
Please keep to the subject. Opinions published here are of our visitors, not the Typically Spanish team. Comments which go against Spanish laws or which are libellous are not allowed. We reserve the right to delete any comment we wish. Placing a comment indicates you have read our terms and conditions and privacy policy.

Por favor, céntrate en el tema. Son las opiniones de los internautas, y no las de Typically Spanish. No está permitido verter comentarios contrarios a las leyes españolas o injuriantes. Reservado el derecho a eliminar los comentarios que consideremos fuera de tema. Escribir un comentario indica que has leído nuestros condiciones de uso y politica de privacidad.
C Spain4-6-2010 16:52Their families should be ashamed that they have raised such scum
PW1014-6-2010 16:57Having read the comments following the initial report, there's nothing more I could add other than to say I welcome & support all those who have been enraged & disgusted by events.
However, for the mayor of Alhaurin to, in any way, "play down" what took place with his own version of events is also quite repulsive. It either demonstrates proof of his complete ignorance or his sheer dishonesty, or both (take your pick).
The (young) bulls clashed with each other yes, but this was due entirely to the frenzied state they were in - all as a result of those drunken hooligans chasing, taunting, beating & terrifying them
Spain generally & Andaulucia particluarly needs to decide where it wants to belong - entrenched in its third world-dictatorship past complete with all the archaic, irrelevant "traditions",or in the 21st Century with a country & economy within a modern, progressive EU.
Spain has SO MUCH to offer, & I for one will continue to enjoy all the GREAT things about living here. So why does this country still allow itself to be shackled to the ugliest aspects of its history?

Phil. Alicante.4-6-2010 17:16If found guilty, dress them in red suits and make them go into a bullring with six Bulls for one hour. One at a time. If they survive put them in prison for ten years.
Beka, Belgrade4-6-2010 21:20Drunk youth of Spain abusing helpless. Whats going on with moral norms there? Put 1 of them among a few angry bulls. Never again to Spain.
michael, spain4-6-2010 21:35At a time when Spain needs every friendly tourist it can get they seem to do all they can to offend them. I hope these misfits are unemployed and stay that way. Thank God they are not my sons'.
steve,Estepona4-6-2010 21:56I have watched the video clip of this appalling abuse on YouTube-sickening. But let´s not lose our perspective. This appalling behaviour was the action of a few alcohol-fuelled mindless young people. So let´s not project their actions on to an entire nation. Most Spaniards will be as appalled by this as everybody else is. I find the Spanish are generally kind and generous people. At least the bull running has now been cancelled for the future.
eboy granada5-6-2010 18:52Seems strange to pass comments like 'hope these misfits are unemployed and stay that way'. There has been a real slide in behavioural standards, particularly amongst the youth in Spain, over the past 6 years; and I'm sure unemployment (along with no real prospect of work), is one of prime reasons for this. Graffiti, Vandalism and all night gatherings with drunkenness and antisocially loud music are suddenly everywhere in and around Granada (which is generally viewed as a pretty wealthy, traditional and conservative city).

I fear there will be real social problems in the coming decade all over Spain as the depression really bites. We're only a generation or so from what was a police state here and people don't really know how to handle wayward youth, I guess, because they've never really had to. The 'family unit' was strong enough to hold people together and a sense serving your community was always there. That element is slowly disintegrating. Parents (25 to 50) are realising they're in a real debt trap, where they've been ripped off with vastly overpriced, poorly built accommodation that has been planned and constructed way too densely (purely for the profit of constructors, at the expense of any quality of life for the people living there afterwards). These edge of town concrete tenements are precicely what northern Europe have bee pulling down for years, after being identified as a social experiment gone wrong. Even with its advantage of seeing this trend elsewhere, as Spain was playing catch up with the rest of developed Europe, they've still made this mistake themselves - with greed and corruption within construction and planning circles simply being too powerful a force. Kids like these probably fall within that trap, as do a massive percentage of Spaniards now. Repulsive though this kind of act is, I fear there will be plenty more lashing-out and release of frustrations in the years to come, and probably not just towards the traditional target - poor bulls.


Read more: http://www.typicallyspanish.com/news/publish/article_26304.shtml#ixzz0sw36DeBW



Rob in bubble busted land Madrid said:
06 July 2010 @ 22:04

as an aside, I calculated that it would cost me 30% more to buy than to rent, and if I rent I'm not stuck with a place I can't sell in a few years.

As to the Spanish ecomony, yes it is dead in the water, and I personally don't think it will recover for a long long time. Will Spain become the next Greece don't think it will in the short term.



Rob in bubble busted land Madrid said:
06 July 2010 @ 21:52

Vikki, I would suggest moving to Spain, life is very nice here, and if you live on the coast you don't even need to learn Spanish, but avoid problems by renting rather than buying. It keeps your capital free and avoid getting caught in the Spanish system. Too many horror stories, many can be avoided by renting (particularly as I feel housing is still way overpriced). As to SS I agree it's crazy, flat rate, some months it's a quarter of my income, craziness.

of course should the euro fall apart than all bets are off.



Graham said:
06 July 2010 @ 20:35

Great post Praguepix


Praguepix said:
06 July 2010 @ 19:21

An alarmist, tendentious piece written by an American (deduced from usage of word'gotten..ugh!!!) nostalgic for neo-con policies which most respected economists woulod contend were themselves responsible for the current crisis. It's noteworthy that countries such as India, South Korea and Brazil which avoided the full neo-con economic Monte have achieved stable growth during the past few years.
Some context:

Ratio of debt to GDP n2009/2010

UK 68%
Germany 73%
France 77%

If I remember correctly, the IMF has an 'acceptable' figure of roughly 65% of GDP.
Spain has longstanding structural problems but it seems there are two main issues at present which are:

1) the misguided pllicy of attempting to make Spain the Florida of Europe, thus provoking an unsustainable construction bubble which, when burst, led to large-scale unemployment and pressure on the banks and all the cajas which now have devalued assets as collateral.
2) the antiquated and rigid employment structure with its two-tier system of temporary and permanent contracts which entrench youth unemployment, inhibit training and make it expensive for small and medium-sized firms to shed workers in a severe recession.
As for being accustomed to 'socialist handouts'.....what is the difference between a socialist handout and a hefty tax concession or a huge grant of government money to an industry e.g. the money spent by the US and other Governments on arms expenditure?



Graham said:
06 July 2010 @ 18:49

and another thing. The author's bio goes to a lead capture page so you can hear even more of this total alarmist BS. Guess what they actually predicted Obama being elected!!! Wow in a two horse race they picked the winner.

Sorry I am getting sarcastic but trash like this gets on my t**s. You see it every day in adverts on the TV where you will get killed by touching your soap dispenser or whatever or other detergents don't kill the really dangerous germs... Seriously lme alarmist rubbish.

Oh and by the way I do not have my head in the sand but there are other ways of making a living than scaring the sh** out of people



Paul H (Frigiliana) said:
06 July 2010 @ 17:12

I agree that there is a lot more unemployed this year and most developments have stopped, which in itself is good news. However in our little village I have never seen so much activity in renewing main services, roads etc. The governments plan 'E' subsidising the work. Also the number of private houses being reformed due to lower costs. The British may be holding back from buying but the rest of the world is happy to invest at this time as the property prices are not going to get any lower.


Keefieboy said:
06 July 2010 @ 17:11

@CookieCrew: agreed, agreed: agreed. I'm an autonomo, and the SS is killing me. And what do I get for it? A puny pension after 15 years (except it'll be 25 years by the time I get there), and a healthcare system that can't give me an appointment until after August because that entire clinic shuts down for vacacciones. Grrr.


sean Doyle said:
06 July 2010 @ 16:38

I never knew Mr Bean had a twin brother !!!


Cookiecrew said:
06 July 2010 @ 16:17

If the Spanish government changed the ridiculous way they collect social security contributions from the unaffordable (for many) flat-rate to a progressive, percentage-driven one, they would probably find that unemployment figures would plummet and the collection of contributions would rise. There is a vast black market here that has been created by this one thing alone.
Apart from that one soap-box point, I have to say also that I agree with the last two contributors in that I am sick to death of all these harbingers of doom making sweeping and often untenable statements like those above.



Graham said:
06 July 2010 @ 15:38

Point by Point
1) I lived in Asturias in the early 90's with 25% unemployment. Spain is a high unemployment country due to structural probs. Black economy is huge
2) Nowhere near as high as the UK
3) True
4) Fitch and S+P have lost any credibility they had and heir ratings are totally political for their hedge fund paymasters
5) True
6) Total bollocks. The report has been totally discredited. The figures are utterly wrong. Do some research first.
7) Maybe, maybe not
8) Things are not rapidly getting worse. On the Costas you may be right but in the cities economic activity is picking up a lot compared with last year
9) They will take it lying down and they will go on strike but nobody will follow it. (Well less than 20%. On the 21st of May 13% of people went on strike)

Apart from that get yourself a pint pot and half fill it.



Finisterre said:
06 July 2010 @ 15:05

This is an incredibly tendentious, partisan and alarmist article, the value of which can be accurately assessed by the fact that it doesn't actually specify what form this 'collapse' would take, other than to mutter a few dire warnings about dictatorships(!), a ridiculous idea for which no evidence is offered.

Furthermore, it ignores the fact that the government has already taken measures to cut "socialist" (gasp!) spending - ignores it, except to pretend that the population of Spain have any more chance of preventing these measures from going ahead than the population of Britain does to stop the LibCons slashing everything in sight.

The figures it does offer are meaningless, either because no context is given (budget deficit 11.4% of GDP? The UK's is about 13%, and no-one's suggesting they're about to collapse), or because the context is irrrelevant (since when has the number of *unsold homes per capita* been a reliable indicator of economic stability?).

No-one can doubt that Spain's economy is in trouble, along with very many others. But to predict apocalypse is simply nonsense, and to blame it on 'socialist' spending when the global crisis which is mostly to blame was caused by capitalist greed and recklessness is even more so. 1/10.



vikki said:
06 July 2010 @ 14:46

Surly this article will put more people off buying a property in Spain, I am nearing retirement so was planning to relocate to Spain. Should I now hold back for a year to see if the economy improves, there does seem to be lots of good priced property on offer at present.

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