Destroying the culture of ownership
In conclusion, we could say that the deregulation of the mortage market, Euro Interbank Offered Rate (Euribor) historic lows and Spain's inclusion into global capital flows made widespread indebtedness possible. Access to cheap credit accompanied a regulatory and legislative framework that rewarded buyers and penalized renters. At the same time, corporate power spheres cultivated a series of myths that discredited renting and emphasized the benefits of owning a home. These were catchphrases repeated by administrations who encouraged people to buy, by denying the existance of the housing bubble or labeling economic downturns as "soft landings". Mainstream media reproduced and repeated these messages until they became integrated into the common sense of the people. At the same time, banks and savings banks introduced mechanisms for circumventing existing credit risk controls and utilized deceptive advertising that incited people to borrow.
Conveniently mixed together these ingredients shaped the popular imagination and built a culture of ownership in our country. The public was subjected to a barrage of stimuli that drove thousands of people to borrow beyond their means. This explosive cocktail stigmatized renting as a land tenure system. Renting became a residual option for those who were unable to buy a home. Within an individualistic soceity that measures people by what they have and recognizes them by what they own and how they consume, entering into an elite club of homeownership became a requirement for becoming a first-class citizen.
When the housing bubble burst, it exposed the fragile foundations on which the "Spanish miracle" was based.
The tragic attempt to rescue the "real estate Titanic"
Despite the resounding failure of the "ownership project", there are too many interests at play. The accumulation of land and housing by financial institutions as a result of bankrupties and foreclosures have placed the concentration of property into the hands of the few. With so much brick in their balance sheets, the management of the estate assets becomes a priority. The restructuring of the banking system responds in turn to this new dimension of business. The banks, now the biggest real estate agents in the country, exert the necessary pressure for the adoption of housing policies that don't go against their interests.
In the meantime, the paralysis of the real estate sector seriously threatens the viability of financial instititions. It is estimated that there are currently a stock of between 0,8 and 1,4 houses than cannot be sold. Real estate developers owe approximately 400,000 million euros to the banks, while the outstanding mortage owned by families amounts to around 650,000 million. A study carried out by Price Waterhouse indicates that the refinancing of mortages to individuals and businesses signed before the onset of the crisis only served to buy more time. We expect yet another wave of real estate bankruptcies that could threaten to drag down financial institutions. The bailouts of Caja Castilla-La Mancha, Caja de Ahorros del Mediterráneo, Sa Nostra, el Banco de Valencia, Unnim, CatalunyaCaixa, Nova Caixa Galicia and the nationalization that has caused the most commotion so far, Bankia, one of the four most important financial institutions in the country for its number of clients, shares, volume of assets, are an omen. Further bailouts of the banks would shoot public debt to new heights and open up a scenario not far from what happened in Greece.
We find ourselves within a no-win situation, in which one gains at the expense of others. It becomes increasingly difficult to consolidate the interests of financial institutions with the needs of the majority of the population. Faced with this dilemma, where does the government swing?
The political agenda: caught in a loop
The government, with public housing that barely covers 1% of total housing, seems unwilling to respond to the emergency housing situation that many of its citizens find themselves in. Despite the "opting to rent" siren song, measures taken until now are mainly aimed at reviving the Real Estate sector, put a stop to falling prices and protect the interests of big landowners.
In this sense, it is completely perverse that as soon as the demand for renting started to revitalize, more contraints are given to renters while greater guarantees designated to major landowners (ie, banks) of empty, unsellable homes. And banks always win; while they accumulate thousands of empty homes that the public cannot buy, not even through a mortgage loan, new reforms benefit major landowners by allowing them to rent without risk by reducing tenant's rights. At the same time, it paves the way for the anticipation of an economic recovery when credit once again begins to flow and people are once again pushed towards borrowing, given the instability and insecurity that the option for renting entails.
On the other hand, in September, 2001, the government passed a law that streamlines evictions for non-payment of rent.
Therefore, in the middle of a crisis and with more than 5 million people unemployed (many receiving not a single form of social assistance), the benefit and security of major landowners took precedence for the social function of property and the guarantee to the right to housing.
Despite the shock therapy applied by the government to revive sales, this systematic exit to this crisis of overproduction is not realistic. The market is saturated, demand exhausted, families indebted and speculative investment disintegrated. It will take years to go through the existing stock that digested so much brick and debt. Desperate efforts by the Administration to revive the economy using the same script as before indicate a tragic attempt to save an inexorably sinking "real estate Titanic".
The weakest link: accumulation by dispossession
With the depreciation of real estate, many people have seen their assets, largely dependant on primary homes, substantially reduced. For those that bought their homes at the height of the housing booms, the current value of their property is much lower than that the debts they took on to acquire them. Taking into account the distribution of wealth in our country, this fact hurts working and middle classes and more widens the gap between the haves and have nots. This activates the so-called "poverty effect" of families, reducing consumption and to further depress the economy.
As we have already seen, this is an emergency situation for those that become unemployed and who can't make their mortgage payments. Without a home, an unpayable debt, morally blasted and without any legal rights, thousands of families plunge into the abyss of social exclusion.
At the same time, rental prices barely moderate. The availability of rentals is still low despite revitalized demands for them in the wake of the crisis. With an unemployment rate approaching 25%, the reduction in the average household income increases the effort needed by families to pay for housing. With more than a million and a half homes in which every member is unemployed, the threat of eviction hangs over thousands of families. Meanwhile, the evicted homes feed into a growing stock of empty houses, the largest in the European Union. This situation exacerbates the contradictions of a system that protects property rights of major landowners to the detriment of the basic needs of its population.
Crisis as opportunity?
But this is not all bad news. The property myth is beginning to crack. The market is not untouchable. The crisis and its ravages have dynamited the society-of-homeowners-project, conceived by authorities, that functioned as a mechanism of social control and aligned itself with corporate interests. With thousands of evicted families, millions of empty apartments and increasing social demand for renting, it opens up a new political scenario. A large-scale bailout could trigger social unrest and open up the context of opportunity to condition this rescue.
Until now, the injection of public funds into the banking sector have not resulted in the banks assuming responsibility for their actions. According to calculations made by the Plataforma de Afectados por la Hipoteca, with the 100,000 million Euros given out by the Orderly Bank Restructuring Fund (FROB), the State could have acquired almost one million apartments at the price being awarded by banks and saving banks through the foreclosure process. This would not necessarily be a bad thing, the PAH and other critical voices demand the reconversion of real estate currently hoarded by banks and saving banks into affordable social housing. It seems like common sense, however that we live in a time when the concentration of power makes sure that proposals which, although essential for a major part of society, are being blocked in Parliament and not reflected in mainstream press. Only a strong social movement could change the power relations and turns things around on an inert ownership model that has had devastating consequences within economic, environmental and cultural fields. So it has been throughout history, fundamental right systematically violated, such as the right to housing of today, have been overturned by civil society who decided to put limits on the privileges of a few.
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