Banks, Savings and Loans, Real Estate and Public Policies - A Historian Reading of the Spanish Financial Crisis: Is Spain Always Diferente?

The present crisis of the Spanish financial system is mainly to be found in a real estate crisis, appeared in 2007 with the outburst of a speculative bubble grounded in hazardous expectations about a two-tiered market, national and international. The building frenzy had been increasingly supported by banking institutions and above all by savings and loans institutions, active in collecting households savings and granting mortgage loans. Badly managed, lacking equity, they proved very sensible to private interests and political pressures. The real estate crisis inflated their balance sheets with overvalued and illiquid assets. The political remedy, the “bankarization” of savings and loans, avoids bankruptcies but shifts the crisis consequences to new entities, such as Bankia. The collapse of real estate and the financial crisis have broadened the spectrum of the crisis with regard to public budgets,the Spanish economy and society. Politicians appear as powerless as unable to renew their thinking on the economic growth.