The Limits to Urbanisation

Abstract

Writing in the British newspaper The Guardian in June 2012, an emeritus professor of international banking and finance at Barcelona’s prestigious ESADE business school gave his own verdict on the roots of the crisis:

Spain’s banking crisis did not come out of the blue. In the 1990s the Spanish suffered a bout of collective madness. Interest rates fell from 14 per cent (with the peseta) to 4 per cent (with the euro) in a matter of weeks. In 1998 the centre-right government passed a law that significantly increased the amount of land for development. Developers got rich, selling the idea that everyone was going to win because property would always go up—never down—in value. German banks financed Spain’s savings and commercial banks, which needed extra funds for high-risk mortgages. Greed made us rich for a while—but then it made us poor, and jeopardised our future.