The people of Spain are now living through the fifth year of a deep economic recession, experiencing a level of unemployment that would have seemed utterly inconceivable in the decades before the bottom fell out. Government measures and European Union prescriptions find little popular support. But despite countless protests and furious debate, the Spanish are becoming disillusioned with all the options before them. As the recession lingers and the hardships intensify, the answer increasingly is “none of the above.” For the unloved government, the apparent lack of appealing alternatives is the most tangible reason for solace.
In contrast to the woes besetting other European countries, most notably Greece, Spain’s economic nightmare was not triggered by excessive government spending. Before the crisis started, Madrid’s fiscal house looked like it was in good order, well within EU budgetary guidelines. In fact, the last budget before the crisis showed a surplus of 1.9 percent of GDP, with debt at just 38 percent of GDP. But, tragically for Spain, much of the country’s prosperity was built on the deceptive strength of an unsustainable housing boom. When the global economy started deflating and the eurozone fell into chaos, Spain’s housing bubble began leaking air at an alarming rate.
Without the housing industry to propel it, the country fell into a vortex of plunging government revenues, plummeting property prices, bank insolvency and an economic collapse that has not let up since.