The Spanish Economic Crisis

Although, I may have spent a good deal of my first month in Spain in bed, I have still been here for going on two months and am constantly taking note of new cultural differences. First off, the economy.

Oh the economy... So the Spanish economy is not just bad, it is really bad. They call this time "la crisis" (the crisis) because the economy is plummeting. After a serious real estate crisis in 2008 when, much like the US, banks were granting mortgages to those who could not afford such homes, the situation has only gotten worse. Some banks have completely failed leading to the need for the EU to bail out Spanish banks last year. Many protests have been taking place since 2011, and even before, against bankers and politicians for their lack of representation of the people during this economic crisis.

Spanish public workers on strike: 2010

I love to talk to random people on the metro, in lines, or even most recently at a parade. The couple at the parade were very enthusiastic to speak to me about the economy of Spain because they loved hearing from an American an overview of the situation in America. I learned one heck of a lot from them. At the Carnival parade I went to this weekend there was a strike of people walking down the street, dressed as doctors to keep public health care. Below is a picture I took:

With a 26% overall unemployment rate and a 55% unemployment rate of young workers (those a few years out of college), times are hard. Last week, there was a three-day strike of university and high school students, the second three-day strike this year, protesting the budget cuts for education. Marta, my host sister, attends a public university and her classes were cancelled due to the protests. She could either actively participate in the protests or as she chose, stay home safely. The Spanish Students Union claims up to 80-90% of high school students participated in the strike.

Student strikes in Spain

The Popular Party is proposing an overthrow of the current system in order to emphasize math, science, and foreign languages. During the reign of Franco, not many Spaniards learned English, but now more than ever Spaniards are in serious need to learn other languages in order to obtain jobs. Spain spends 28% more per student on education than the average European country. This leads to some serious issues when Spain is investing so much money on students, who are then forced to take their skills and talents to other countries and contribute back to those countries instead of Spain. This is the fear that most people talk about with me on the streets. The Popular Party has issued a statement that they will offer incentives to companies for hiring people under 30 years old, but will it be enough to keep the youth in the country?

During my stay here in Spain, the metro workers have gone on strike and in several towns in Spain, the sanitation workers have gone on strike. These are people you do not want to upset. All around budget cuts are lowering wages and laying off more people. "The IMF predicts that Spanish unemployment will decrease slightly next year but will remain above 20 percent until 2017." I've witnessed a few protests in the Madrid's center, mostly against the banks. As someone not directly affected by the Spanish economic crisis, its fascinating to witness from the capital city.

Protests to keep public health care

My host-brother, Guillermo, has his master's degree in finance, spent the last 6 years working for a company in London managing their French affairs, and therefore speaks three languages. But now that his company laid off their workers, he is unemployed and unable to find a job. He is only 30 years old, has 6 years of work experience, master's degree, and speaks three languages. When someone of this level of criteria cannot find a job something is wrong. So he has returned to Madrid with his family, where he would like to stay. He told me that he is one of the few Spaniards coming back to Spain at this time, however, and may need to leave again himself should he remain unable to acquire a new job shortly.

Since I had been researching the Spanish economy, I decided to speak with him about the situation further (also because he, unlike others I've spoken with, can speak in English). I've learned some interesting things. Much like in the US, the banks lent out money for mortgages without restrictions for many years. This lead to a serious problem when the economy collapsed. But what makes the story worse is that many people here are having their homes foreclosed, but unlike in the US, this hasn't been cancelling their debt. Some banks have been taking people's homes and STILL requiring the people to pay back their immense mortgage on a home that is no longer worth anywhere close to how much they owe. People are mad. This is why I have witnessed so many protests outside of banks. That, and also, the people are mad that the government is giving so much money to these banks who are now benefiting from screwing over their clients. Now its near impossible to get any sort of loan because the banks don't trust anyone since no one has any money.

Even Spanish bank workers went on strike (The bank Bankia is a major contributor in the economic crisis)

Some other interesting information he told me is that the failing economy has made a lot of scandals come in to the light from the government. Unlike other parts of Europe where a politician will be fired for secretly keeping millions in Swiss Bank Accounts without paying taxes, Spanish politicians almost never receive any sort of repercussions. This angers the people greatly, especially at a time when they are hurting so badly already. The judges are part of the same political party and are therefore biased. Baltasar Garzón, the famous Spanish judge for issuing an international warrant for arrest against Pinochet of Chile, was found guilty of illegally recording conversations between lawyers. Although the conversations he recorded proved these people guilty of fraud, this was used against him to be stripped of his power and replaced with a hand-selected judge. This is another thing to greatly anger the people. Even the royal family has had some financial fraud come into light. The husband to the king's daughter was found guilty of pocketing a lot of money from a  non-profit. Not only is it a hard time economically, but its a hard time politically for Spain at this time.

Now that the Spanish government does not have a lot of money to invest to even save the economy, the government is trying to privatize health care and universities, much like what is found in the United States. But the problem is that the Spanish people are accustomed to these services. That, and their taxes are now higher than ever.

Another observation of mine has been that there are a LOT more men pushing baby strollers around town with the little kids than women. Almost every time I see a baby, there is a man holding the child. After talking to several people about this observation, I've come to realize that a lot of men are loosing their higher-end jobs, which would make it more likely that their wives may keep their jobs, which tend to be lower-income. This leaves Spanish men is a difficult position because they are not used to this role and are now confused by the reversal of roles. I've even been told that there has been an increase in domestic violence as men are unsure how to allow themselves in such a situation.

As one more side-note for anyone who may be interested. The Spanish government is allowing an American company to create a mini-Las Vegas outside of Madrid. Despite the drugs, prostitution, and alcoholism that this can bring to the area, the government of Spain is actually helping the foreigners make this happen. They are considering allowing smoking inside the casinos, just for this company, as well as allowing this company to pay lower taxes in return for coming. Maybe it'll create jobs, but these may not be high paying jobs for the Spaniards. Read more about it in the first link below:

http://www.guardian.co.uk/world/2013/feb/08/eurovegas-gambling-complex-madrid

More interesting reads:
http://www.euronews.com/2011/06/19/spanish-protesters-rally-against-politicians-and-banks/
http://en.wikipedia.org/wiki/2011%E2%80%932013_Spanish_protests
http://www.forbes.com/sites/danalexander/2013/02/08/with-youth-unemployment-at-55-percent-spanish-students-take-to-the-streets/
http://www.guardian.co.uk/world/2012/feb/09/baltasar-garzon-guilty-wiretapping-spain
http://en.wikipedia.org/wiki/I%C3%B1aki_Urdangarin,_Duke_of_Palma_de_Mallorca
http://www.straitstimes.com/breaking-news/money/story/us-firm-las-vegas-sands-confirms-madrid-mega-casino-project-20130208