Spain Was a Warning

When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results. Interest applies on cash in an investment account. Terms apply.

In 2006, Spain's economy was booming, experiencing unparalleled growth since the turn of the millennium. With per capita output more than doubling in just six years, some economists predicted that Spain could surpass Germany in per capita income within five years, positioning itself as a central power in Europe.
The real estate sector thrived, with agents becoming local celebrities and tradespeople in high demand. However, this growth was unsustainable. The global financial crisis (GFC) and the Eurozone crisis abruptly ended debt-fueled expansion. Nearly two decades later, Spain's economy remains weaker than in 2007. High unemployment, stagnated economic activity, and persistent debt struggles paint a grim picture.
Spain's story serves as a cautionary tale. This raises critical questions: What fueled Spain's rapid economic growth? What led to its dramatic downfall? Why has the recovery been so slow?

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When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
Interest applies on cash in an investment account. Terms apply.

[DataIsBeautifulOfficial]

Spain's out here topping charts with both high life expectancy and unemployment. Kinda makes you wonder if there's a link, huh?

[Userr]

If there's one thing I know about economics its that investor caution goes out the window as soon as something "new" comes along because they're all too busy trying to get rich before it all falls over.

[EstherRoss-gmqv]

The global economy is in quite a state right now. We've got inflation, supply chain issues, and geopolitical tensions all playing a role.

[JessieBanana]

Unfortunately, “we” are not in a position to learn anything. The people who make these short sighted gains do not care, it’s not ignorance. The rest of us normal people are just pawns in their game.

[ticketforlife]

So in short. Housing should not be an investment and treated like spiculative stocks.

[pauprat]

I remember Spain pre-crysis, people working in the building industry were earning 2000 euros per month, there were BMWs everywhere. Everybody was leaving high school to be a plumber, painter.. no one wanted to study when they could earn more at the construction sector.

Banks issued mortgages for the 100% of the value of the house, and even stretched more to include the car and a holiday trip. No one thought it was bad because house prices always went up.

[Victoria-ioqb]

The situation in Spain mirrors what occurred in California: loans were issued based on inflated property values, leading to significant financial repercussions.

[Garris_Shrike]

Another interesting consequence is that today we have a massive amount of houses owned by banks that they will NEVER sell. They rather keep their fake value in the books than sell it for their actual current value and write down the loss. This drove a massive "okupa" (squatter) phenomenon as banks never tried to get these properties back. They just don't care, even today.

[neeneko]

I think as a general rule.. any time real estate investors and developers get excited, it should be taken as a warning. When they start winning, everyone else is about to lose.

[dustyday]

spain never recovered from the 2008 banking bailout - it's still paying off bank debt with interest to the eu until 2027 or later, and they raised taxes massively to finance that

[blackshard]

Nobody expects the Spanish Premonition

[Thatwaterguy]

What do we not learn, when we have more access to data than any time in history, but keep making the same mistakes?

[hugoyoutubechannel]

I’m a Spaniard born in 2003. Never in my whole life have I heard people consider we are out of that crisis, in the sense that we now do not live better than 2008 or pre 2008. And that bearing in mind that I come from one of Spain’s wealthiest regions (the Basque Country)! Of course we are no longer in a recession but many, many people’s standards of living are not quite the same. This used to be a country in which a full time job paid all of the needs of a family of four. The rise in food prices, services and housing has obliterated most people’s purchasing power and it shows when people look back in time and hope for times like the ones they lived.

[stanleyzac]

There are many other interesting business and stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire..

[yoelgallardoortegon]

Hi, I'm from Spain, glad to see all this mess isn't going unnoticed. I'm 23 and getting a well paid job inside my own country feels actually impossible. Both my elder brother and sister had to go real far to get a stable job that pays enough to live (italy and holland) and it seems to only get worse with time. I fear I'll have no other choice than to follow on their steps and bail out while I still can, which is a shame, huge one at that. Hope SOMEONE learns from the mistakes my country made.

[Neilos-sdti]

As we spaniards call it: La crisis del ladrillo

[ijhuana]

Spain mistake was to save banks to protect the money of the most powerful. Politicians got for years access to unlimited funds cards also called "tarjetas black", to keep them happy while banks and cajas were more and more in debt. When the bubble exploted they quickly nationalised the banks debts rather than let them die.

[davidc]

Nothing was learned. I am from Canada and you illustrated nicely where our housing/financial bubble is sitting. There are so many parts of society that benefit from inflating bubbles and maintaining bubbles, including municipal governments or anything where taxes are dependent upon high property valuations.

[pvpcanario]

i live in Spain, middle class has been wiped out and they´re suffocating entrepreneurs out of every cent for taxes, when government workers live better than entrepeneurs, you know you messed up