Wednesday, August 01, 2012

Where did the money go?

In the heyday, towns and regions in Spain spent like a man with fire in his pockets. Their excuse was that they needed to compete for the growing international tourist market.

Nowhere did they spend more than in Valencia. Thanks in part to Francisco Camps, the region built an airport at Castellon which cost 150 million euros which has not had one flight take off or land on the new runway. Then there was the 2.4 billion euro new harbour built for the Americas Cup in 2007 which is now largely empty. The region pays 20.5 million euros to Bernie Ecclestone  each year to stage the F1 race and they built a lavish opera house which  Santiago Calatrava constructed at a cost of 1.1 billion euros.

On top of this, there were theme parks, museums, art galleries and lavish new universities all built at a time when money was easily come by. Cities were connected by new high speed railway lines and new  motorways. It seems that nobody foresaw that this could not possible last, they must have imagined that the property bubble would go on forever.

It wasn’t just the region that spent money like it was going out of fashion; towns like Torrevieja planned and built new facilities for the tourists they thought would flock there. In Bigastro they sanctioned the building of an aparthotel which turned out to be a complex of houses and built a new sports facility along with an auditorium and multi-story car park. The politicians attended tourist fairs in the hope of attracting these visitors. I can only think that the ruling party at the time imagined that half of Europe would want to come and either live in or at least visit the town.  Of course, local people were proud of the party that delivered all this that is until they saw the bills. 

As you might expect, there was widespread corruption at the time and more recently banking scandals have been exposed but in those days nobody cared because everyone was making money. Young people left school to work in construction and bought themselves expensive German cars; carpenters, electricians etc bought lavish new houses with mortgages they can no longer afford. The banks, that were only too pleased to lend the money, are now looking for assistance from the EU. Houses might be cheap but you’d be hard pressed to get a loan to buy one.

So, Spaniards are now licking their wounds and are blaming the Germans for imposing strict austerity. They also blame their own government for accepting the imposition. We face an autumn of discontent as workers strike and revolt against the sanctions.

However, the fault lies, not with the present government but with the people in power both centrally and regionally in the boom years. They were the ones who indulged in reckless spending. They, along with the people themselves, failed to comprehend the misery that their actions would bring in future years. In truth, Spain must largely take the blame for the mess that it is now in. 


Charles Smythe said...

"there actions would bring" ?

multi-story (and not muli-storey)...

my, my, please watch your spelling. After all, children are reading your blog!

And 150 billion euros? Er, 150 million...:

Petrus said...

I agree in principle with all you say...

There are only a limited number of people in Europe who have the desire to buy a property in Spain or visit the country.

In the UK the city of Manchester is now full of apartments that can not be sold - another example of excess building.