In his entertaining lectures at Columbia Business School, the economist Bruce Greenwald likes to employ cite the line often used by Warren Buffett: When the tide goes out, you can see who is not wearing a bathing suit. This is the feeling I have in Spain. In year five of the financial crisis, I can see which of my relatives and friends had no swimming trunks. The slow downward slide is horrendous for the people living it. Over and over we see the bewilderment of those who worked hard and paid taxes. They don’t understand why they are seeing their first-rate healthcare system being undermined, pensions and salaries cut, and their education system — still not up to par — being squeezed further, while being told they have to bail out the banks because that is what Germany insists on. The downturn is persistent enough that the country’s largest bookseller, Casa de Libro, had a shelf dedicated exclusively to books about the “crisi” (see picture).
Spain under Francisco Franco was often referred to “la vida en blanco y negro,” or life without color, because it was so grim and gray. Franco’s departure showed the pent-up energy and creativity of the Spanish people. It was but a short time before the economic disparity between Spain and the rest of Europe — large even before Franco but a yawning gap in the years of his dictatorship — dwindled. Barcelona, for instance, became a global center for design.
In this harsh new world, many people are now irrelevant to the daily functioning of the economy. Architects, graphic designers, book jacket designers–-these kinds of professions now seem like a quaint memory. No one needs them, and the fear is that, if and when the economy recovers, many won’t be needed then. The few friends who have jobs live with the threat of layoffs and repeated pay cuts.
In this new environment only the fittest survive. I’ve noticed that people writing about Spain tend to bring in their cousins as evidence for whatever point they want to make. Well, two of my Madrid cousins didn’t go to college. They wound up in Amsterdam. One washed dishes in a hotel and the other sang on the street for change. Their mom was kicked out of a rent-controlled apartment in Madrid and now lives with a passel of other unemployed relatives in an old family house in a tiny town outside Seville. No heating or air conditioning, no car, and it’s a 20-minute bus ride to go get groceries. They would love to offload this white elephant, but no one is buying. Another friend inherited her mom’s apartment and before the crisis had the bright idea of buying a few fixer-upper apartments. She would spruce them up and resell them once the neighborhoods gentrified. We warned her not to buy more than one or two, but who listens to friends? Besides, in the days of the real estate booms in Spain and Ireland and the U.S., who could lose money investing in real estate? The naysayers were losing out on the opportunity of a lifetime!
She put down deposits on three or four apartments. Five years and multiple lawsuits later my friend (in her sixties) has lost everything. The good news is that after looking for a year she found a poorly paying office job. “I don’t feel sorry for myself. I have food on the table every day, and that is more than many people in this country have now,” my friend said.