Borrowing cost for Spain rose again to over 6% in Monday’s bond sale. Worst still though, some of the regions debts are in junk status making it almost impossible for them to borrow money to finance their deficit spending.
Valencia (the region we live in) and Castile-La Mancha are the biggest worries as they both face crippling interest payments. In Andalucía, the situation is unclear because it is feared that the caretaker government are concealing their debt.
Sources in Madrid say that by May, the government could take over running of the rogue regions in an attempt to get their deficit down to the 1.5% target for this year. In effect, that means higher regional taxes and cuts in the two main areas that regions control; health and education.
How were any of us to know this in those heady days when towns were rich, the regions were rolling in money and the country was just sunshine and fiestas.
Yesterday, I went down to take photographs for a couple who had bought their dream home in the Los Altos de la Pedrera development. They wanted to know what state the house was in since they were forced to leave as the banks took over from the beleaguered developer.
What I saw did not paint a pretty picture. The whole area is overgrown with weeds and the pool in the centre has centimetres of green water at the bottom. The houses, that had been completed, still looked OK from a distance. However, closer inspection revealed that they had all been broken into. Some had grills and windows removed to gain access, the couples own house had its front door removed. I didn’t attempt to go inside but I can imagine that anything that could be taken had been removed and the rest was just trashed.
This is in the sleepy town of Bigastro, imagine the state of houses, left by bankrupt developers, in more popular areas.
For the banks, who now own these properties, it must be a nightmare they don’t want to think about. Even if they could find buyers for these properties and resolve the debts on them, how could they hope to sell houses in such a state of disrepair?