I'm spaniard. Spain has been cooking its books for a long time. Brussels knew it, like they knew about Greece doing the same thing(their economic pros are not stupid) but they short term benefited from that.
The "Spanish miracle"(like Ireland) was created when billions of euros mainly from German and French savers came to Spain as loans. That made money to flow and prices to go up, anyone could buy a 60.000eur house(with a loan with 0%down) and sell it three months later as 90.000eur. That is 30.000eur of profit putting 0%, way more than working. Real state agencies grew like mushrooms after the rainfall.
I had friends that bought one house and later two with the profit they made with the first one!! thinking "prices are never going to go down, they had never been down, we are going to be rich".
That was good for sellers, good for politicians(they get taxes money proportional to the assets price), good for the banks that lended(they got paid), good to the construction workers and companies, good for the gov(less unemployment), so they tried to keep it. They all wanted to believe it was sustainable. It was not. Houses grew +400% but salaries only 17%.
Now our prime minister, Zapatero, thinks "confidence" is the most important thing for the economy to grow. He doesn't care about lying at all, he thinks he could fool all the people, all the time. Time will tell.
Quite inflated still, it'll be a long time until they go down or a longer time until wages catch up (in the opinion of some, me included).
The problem here is that you cannot return the house to the bank and be debt free. If you give your house back to them they sell it, and whatever is not covered by the sale you still owe to the bank.
And if you still owe 200KâĴ to the bank but your house valuation has gone under that you have a hard time, because you have to put up with the extra value with some other possessions you have.
The "Spanish miracle"(like Ireland) was created when billions of euros mainly from German and French savers came to Spain as loans. That made money to flow and prices to go up, anyone could buy a 60.000eur house(with a loan with 0%down) and sell it three months later as 90.000eur. That is 30.000eur of profit putting 0%, way more than working. Real state agencies grew like mushrooms after the rainfall.
I had friends that bought one house and later two with the profit they made with the first one!! thinking "prices are never going to go down, they had never been down, we are going to be rich".
That was good for sellers, good for politicians(they get taxes money proportional to the assets price), good for the banks that lended(they got paid), good to the construction workers and companies, good for the gov(less unemployment), so they tried to keep it. They all wanted to believe it was sustainable. It was not. Houses grew +400% but salaries only 17%.
Now our prime minister, Zapatero, thinks "confidence" is the most important thing for the economy to grow. He doesn't care about lying at all, he thinks he could fool all the people, all the time. Time will tell.