Invisible Finger to the Middle Class

The NYT titles one of its pieces, "Wave of Evictions Leads to Homeless Crisis in Spain," and illustrates it richly with Dickensian photos.  You see, no matter how hard it is here, they have much worse over there, darn socialists!  Here are few comments from those who are much closer to the situation, here or there:

Luboman411 NY, NY

I think I found the pivotal reason why the real estate market went crazy in Spain, even compared to the real estate madness that struck countries like the U.S. prior to 2007--non-dischargeable mortgages. Of course mortgage lenders in Spain went haywire--they (erroneously) believed that they wouldn't suffer any downside because debtors would always be forced to pay every penny owed, regardless of the overall macroeconomic situation. In the U.S. mortgages are dischargeable in bankruptcy, and that risk probably led some (but not all, obviously) mortgage lenders to use some risk-management when lending out. There were still construction workers with elementary school educations who took out massive mortgages in the U.S., but at least when the economy imploded both the bank (through losses on discharged mortgages) and the underwater debtor suffered the nasty consequences of their foolish greed. That doesn't appear to be the case in Spain--the mortgage lenders are not suffering that much, but the debtors are, and cruelly, I might add.

However, something similar to Spain is happening now in the U.S.--student loans. Student loans in the U.S. are non-dischargeable. Now universities are charging immense sums for educational experiences that are, at times, not worth the inflated prices. Millions of Americans now owe huge sums. There will be a day of reckoning in the U.S. sometime soon if universities are not made to share the risk of ever-rising tuition prices.




AlberTohLoco Madrid

I'm Spanish and I love reading the New York Times, but lately you are publishing a series of articles and photographs of Spain that do not reflect the reality of life here. Here are evictions but there are also other places in Europe and America, if I were American and knew nothing of Spain and would read these articles, I would think that Spain is a country where people are starving and many people are homeless . But that's not true, people looking for food in the garbage also there is in the United States.

For Americans, the United States is the best country in the world, but I live in a country with an unemployment rate of 25% but in which people do not die at the doors of hospitals. We have a huge debt, but our social security continues to serve free.Many of the pictures I see, are from minorities or immigrants and slums, I am sure that if you go to the slums of the United States will find pictures very similar to these.

I'd love to read an article and see photos that reflect the current reality of Spain and not see sensational photos only show the worst of this country. Finally apologize for my English.This goes for all the Spanish that we are outraged seeing these images. Viva España.

rq Barcelona

Dear Alberto, you may live far away from the reality of our country. 500 evictions per day is the reality!! And two recent suicides for that.
In the other hand, billions of euros payed in taxes by us go to the rescue the banks. The same banks that backed up our corrupted governments (both from the left and the right side parties)



S Spain

I can help agreeing with AlberTohLoco. I love NYT, but in the previous months I've repeatedly felt ashamed with some pictures and skewed comments you're publishing when portraying Spanish reality. I'm a regular midclass Spaniard who had the chance to study a career thanks to public grants, and to do some internships in the US (also with public grants, even in 2012). The pictures you show do not reflect reality, since people who are unemployed receive many public and social services that do not even exist in countries such as the US. Thanks God, our system provides with Universal Health Care to all citizens and even with this crisis, and with 26% of unemployment, just a few need to find food in the garbage. The situation is sad, but you should reflect also how a country like this is tackling the crisis, and compare that with how a country like the US (with a similar Index of Human Development) is facing a less worse situation. Figures of homeless and starving people, or mothers giving birth on the street would overwhelm any European society. You don't see that here.

What you are missing (which is ashaming for NYT) is that based on a law from 1906 (!) if the bank gave a mortgage of 200.000€ in 2004, and now the family can't pay it, the bank will reevaluate the appartment. If the price now is 150.000€, the bank will evict the family, take the appartment and they will still owe 50.000€ to the bank --> That's the problem!

Please, NYT, you can do better ;)

Spanish man Madrid

The situation here in Spain is a nightmare. Politicians instead of helping are doing the contrary. They work for the millioners not for the people. They say that we have to work harder but if you try to build up a small business in Spain you will loose all your money paying stupid taxes for the local administrations. There is no plan to re-construct the economy because there has never been the will of trying to create jobs or anything similar. While people are been evicted the big companies, banks and the CEOE are making huge benefits as ever. Do es that make any sense? I made this video to show how are politicians are...




sarajane Atlanta

I was just in Spain and found so many things "made in China". Just like in the USA. Even leather goods- handbags and shoes- that Spain has been known for their quality- are now being made in China. Politics aside, how can countries keep their people employed if all money is being sent to China? This is a worldwide crisis now.



Mark Boston

Banks and the superrich are watching the situation in Europe closely. It will set the pattern for what happens here when our financial system collapses. Their goal is to expropriate the middle class and consign the large bulk of the population to serfdom. Issuing outsize mortgages to people with modest incomes at the height of the bubble was not necessarily a failure on the part of the banks, but part of a strategy aimed at expropriation after the bubble burst.



FFT Madrid

Before criticize other countries perhaps you should take a look at your own country I´m sura that If I go to the States with a camara I can´t much worst photos from homeless people and how many people was evicted from their homes in the states?¿





PK Lincoln

This sort of disaster didn't happen in Iceland because the Icelanders told the bankers to step-off.


Anna Germany

I am a bit suspicious about these series of news about Spain that have been going on for about a year to convey a rather negative view on this country. No doubt Spain is going through tough times. However, the NYT seems almost obsessed to portray a especially miserable picture of Spain. These pieces of news are extremely well crafted in doing so: the black and white pictures emphasizing the contrast between the two colors, people in melodramatic poses, the personal tone of the news with little or none objective information (no data, statistics…) The morally dubious tone of this news is especially sticking because it casts doubts over Spain’s economic recovery and therefore makes more difficult for this country to finance its debt, which on the other hand would help the banks and the economy and avoid evictions. What I am asking is that there is a political motivation behind these news, which I do not quite understand.




C.H. Italy

I have visited Andalucia, Barcelona and Madrid several times in the past few years: Scores of stalled construction projects, condemned buildings, apartments for sale or to rent at ridiculously low prices, empty apartments, and many families with no homes at all. An incredible market failure. Beyond that, an incredible human tragedy. Clearly, waiting for the invisible hand to help the economy "self-correct" is as useful as waiting for God himself to intervene. Four years later, the subprime crisis continues to claim victims, both in Spain and the U.S. Families with no home who take over empty homes are doing the right thing.



HotelAnexo Rialto Madrid

One of your photos has a woman crying in front of a Catalunya Caixa office. Catalunya Caixa is one of the savings & loan banks run by a former politician with no previous banking experience but lots of connections. It had to be bailed out by Spanish taxpayers (the second biggest bank debacle in the country) and he took a nice retirement.

Delinquent mortgages and property have already been written down significantly by the banks to comply with various rescue plans that have been implemented in Spain. What’s left is being transferred to a so-called “bad bank” (SAREB). It would make far more sense for SAREB to then write-down the balance due and refinance, or let the people stay for a reduced rent so as to take care of the property.

Mortgage rules in Spain are draconian and pre-date democracy, with the Banks able to seize a property, add lots of extra expenses, value it at half of its market value, and then pursue the debtor for the balance for the rest of their lives. Another obvious solution is to transfer more risk to the banks, and force them to accept the property as full payment on the mortgage.




Federica Fellini undefined

It is very ironic to read about the terrible situation of some Spaniards and also to read about Zara's empire in the NYT Magazine. I keep wondering why the 3rd richest man in the planet, Inditex's owner Amancio Ortega, is not showing more generosity to some of this Spaniards.... Come'on this guys is SUPER SUPER rich (richer than Warren Buffet) can he just spare some 'change' and help the homeless families? Just wondering....




Isma Adam Madrid

I live in Madrid and I saw people stealing food and begging for money on trains and in the underground. NYtimes articles are reflecting how people live here in Spain. People are starving...just turn the TV on and you will see dozen of cases every day. What matters is how to solve the problem because 25% of Spaniards have no incomes.




O Paco Bergamo

The fact that someone with a job as a mason (that in Spain means only elementary school) could get a loan to pay for a $320,000 apartment, speaks also about the level of irresponsibility in the system (banks, people, everybody went nuts). There are hundreds of thousands of recent immigrants that also were carried away into this craze. People, with 250-400K Euro debts. Many of them involved their friends and relatives to warranted the loans... Really, at the time most thought they were doing a great deal (prices were going up), the people that were not taking the bait were "idiots and losses". But it was the time were having a university degree would only buy you a 1200Euro/month salary... and being a plumber could afford you 4000Euro/month (tax free, as many paid no tax). Definitely is a drama.




SergeDudeManhattan NYC

I'm just back from Nevada and Southern Cal and I am willing to send the NYT very similar pictures I've been taking there for the last two weeks -for free. Scores of homeless people, families evicted from their homes, foreclosure notices stuck to many doors in Vegas, LA, Capistrano, Laguna, San Diego, Long Beach. Poor people gathering in community centers, lining up for a free meal, pushing their empty carts, looking for jobs in Fresno, in Bakersfield, in La Jolla. Who is the NYT trying to fool focusing on Spain when we have the same problems at home?




Ingimundur Kjarval Delhi New York

Are we heading for the same thing here in the USA, I sense we are all running out of our savings, can't keep up with property taxes, mortgage payments and daily expenses.

And I am not talking about foreclosures up to now, but whole society coming apart because people cant' keep up with their obligations any longer. Does anybody think this is going to get better in Spain anytime soon?

How many desperate people does it need to have a revolution? It seems to me this is in the end failure of democracy, nobody in charge, Obama riding the tiger like the rest of us. Here is a prediction, before long European countries will have kings and queens like in former centuries. Either that or new Mussolini's, Hitler's and Franco's.

The truth is, today we are governed by big business, it decides how society is to be and we to live, their only goal to make an other dollar. Who financed the last election? Who is in charge?not Obama, not the senate, big business is!



Ampangela Barcelona

And still more, the Government gaves to the Banks all the millions of € and the middle and low classes of the whole country had to pay for it. Either with the increased taxes or gaven up the civil servants work. 2.500.000 of civil sevants have been fired,most of the services do not receive any income. Bombers without equipment and the half of theirs companions out of work, the ones who remains working had their slaries cut off, How can to put out a fire?, the same happen with the policeman, the doctors and nurses, the teachers... Meanwhile the Government is selling Hospitals and Schools to private companies that expect to earn more money with it... This is the consequence of follow the Miton Friedman's theories.



marve279 Huelva, spain

Some comments that I am reading about this dramatic piece of news from my country really terrify me and hurt a soul. You should know about Spanish history and Spanish society to express and objective opinion about this terrible reality that is striking the working class of my country. You should know that for centuries the 15% of the population of Spain have lived on the other 85% of the people. This oligarchy has been famous for his cruelty and injustice against the major part of the population of Spain. What we are seeing today is a continuation of this historical process, what once was an oligarchy of landowners who starved to death to landless peasants, today has mutated to a merciless financial oligarchy helped by a bunch of corrupted politicians who act as an organized mafia to rob the working class. You have to know that in my country we are suffering a 26% of unemployment; more than 50% of young people do not have an opportunity to have a job. This terrible situation has been mainly promoted by the financial oligarchy and the political parties inflating an unprecedented speculative housing bubble that exploded in 2008. Do not think that most of the people who are being evicted now are a people who lived beyond their means, they are just normal working people, mainly young people who had to buy a house to live in, but a house with an inflated price. Even there are old people who are being evicted because they guaranteed their children mortgages with their own houses.


Fran BadilloSevilla (Spain/Europe)

Italy is worse that Spain. France is near of precipice. But the North Europe mass media has time only for Spain. The germans banks are worse that alls in Europe. In the 90 lend all the money for spanish bubble. Now germans need that money because are in a deep crisis. Our countries are victims of the usa crisis (remember lethman bros. and the nationalization of enterprise in your country). Now we are trying save our nation. But english banks (all nationalizated) and german banks want save himself but need a victim: Greece, Italy or Spain. Isn´t money, is a politic thing (excuse for my english, ¡viva Bruce Springsteen!)



linzt PO,NY

The whole world became Sick.The businees community, specially Financial Institutions and Corporations,are running the pollitical/socio-economic issues, here and elsewhere.Before the european union, this nonsense did not happen, today, the american style "capitalism" spreading all over with velocity, and we're going to have a very hard times. LooK! Capitalism is to please the Investors, It is reduce wages; elimination of any federal programs,is for corporations to take advantage to privitaze government assets to maximize profit and make the elite to prosper more and more,and the rest of the population ( working class, middle class) to suffer with austerity, loosing everything ,even their basic things in life (House: Education Health) All negotiations in name of PROFIT for the Investors. If every nations around the world continue insisting with this nonsense, we are going to have a very miserable world ahead. Here in america, if we continue to allowed republicans dictator our socio- economic problems we will enjoy the european crowd. Dont forget our banks made a criminal mess here and overseas too , you know!Subprime-mortgages). Dont be so naiive and critical of the europeans or other nations, because our capitalism system is very nasty for us too. wake-up and smell the coffee, life is not about shopping. The big guys are doing fantastic, and how about the rest of 98% of citizens? We work hard but, europeans too. Cultures are different, but compassion is Not.



Jean Tucson, AZ

What a revealing article! It manages to sum up what is so confounding about the financial crises in western countries, with such imagination. The polarities of this problem are lack of personal responsibility (taking out huge loans to "get ahead" or "live the good life") and what amounts to usury on the part of financial institutions by taking advantage of poorly educated people. Greed on both sides.

I feel terribly old-fashioned in not buying more, bigger, better housing (cars, vacations, etc.) every 5-10 years. Still, even as a squarely middle-class American, I am working hard simply to have the lifestyle my parents had....two cars, a bit of entertainment, a decent vacation every year. Austerity becomes self-imposed when you experience the declining standard of living in the U.S. firsthand.

I do feel for these homeless noveau rich. As much as I'd like to think my semi-frugal ways will protect me . . . . I just don't make enough money to save the hundreds of thousands necessary should inflation continue, and wages remain as stagnant (or declining) as they have been in the last 20 years.

I'm just really hoping that pension is there when I get to retirement. In the meantime, I'll refrain from buying a large, plush house in a trendy neighborhood. And I'll keep getting regular oil changes for my 2002 Toyota. And going to library. Etc.



JMB NJ

It seems the Invisible Hand also tapes eviction notices to doors. Who knew?