Banks on the tax haven of Cyprus opened Thursday for the first time in 12 days amid the island's continuing financial crisis, but the country's financial controls could remain in place for another month.

Strict limits on the amount of money that could be withdrawn have been imposed – people will be able to withdraw 300 euros ($383) a day and no checks will be cashed – amid fears of a run on the banks.

Account holders showed up hours before the banks were due to open to get in line.

Early indications were that there was no mass rush to withdraw cash, with just 13 people waiting outside one large Bank of Cyprus branch on the island as it opened at noon local time (6 a.m. ET). They were surrounded by a scrum of journalists.

“We need only from you cooperation, understanding and please patience,” the manager of the branch said before opening.

However a small crowd of people did press against the doors of a branch of Laiki Bank, which is being liquidated. CNBC sources estimate those with more than 100,000 euros (about $128,000) in accounts in Laiki Bank could lose 40 to 70 percent of their deposits.

During the banking shutdown, people could only withdraw 100 euros (about $127) a day from the country's two biggest banks, using ATMs. Most who lined up for the opening Thursday were elderly people and those without ATM cards. 

Deposits above 100,000 euros with the Bank of Cyprus will be frozen and 40 percent of each account will be converted into bank stock. Accounts in both banks with balances under 100,000 euros will be fully protected.

A previous proposal to take less from all bank accounts was vetoed by the Cypriot parliament.

Later Thursday, the Cypriot foreign minister Ioannis Kasoulides said curbs on money movement would remain in place longer than originally planned, "probably over a period of about a month," according to Reuters.

The country is seeking to meet the terms of a bailout from the European Union of 10 billion euros ($12.9 billion) and, in order to raise enough funds to meet strict conditions imposed by the EU, it is preparing to take money from bank accounts.

Ahead of the banks’ reopening, money was flown into the island and guards were seen delivering cash to banks in armored vehicles.

The banks were due to close at 6 p.m. local time (12 p.m. ET).

There was some relief on the island that the banks were finally opening again, but this was mixed with fear about what could happen.

'Slow death'
Yorgos Georgiou, who owns a dry cleaning business in Nicosia, told Reuters that "finally people's mood will be lifted and we can start to trust the system again."

But he added: "I'm worried about the poor kids working in the cashiers today, because people might vent their anger at them. You can't predict how people will react after so many days."

Kostas Nikolaou, a 60-year-old retiree, told Reuters that the uncertainty of the past two weeks had been "like a slow death."

"How can they tell you that you can't access your own money in the bank? It's our money, we are entitled to it,” he added.

The country’s president, Nicos Anastasiades, has described the bailout deal as “painful” but essential.

However, Nobel laureate economist Christopher Pissarides said it was “extremely unfair to the little guy.”

“For the first time in the euro zone, depositors are (being) asked to bail out failing banks," he said. "Now that used to be the case in the 1930s, especially United States (and) caused big bank runs. It has been decided since then that we shouldn’t allow that to happen again.”

Among other controls, the island's central bank will review all commercial transactions over 5,000 euros and scrutinize transactions over 200,000 euros on an individual basis, Reuters reported. People leaving Cyprus can take only 1,000 euros with them. An earlier draft of the decree had put the figure at 3,000.

Reuters summed up the situation facing the island:

With just 860,000 people, Cyprus has about 68 billion euros in its banks - a vastly outsized financial system that attracted deposits from foreigners as an offshore haven but foundered after investments in neighboring Greece went sour.

The European Union and International Monetary Fund concluded that Cyprus could not afford a rescue unless it imposed losses on depositors, seen as anathema in previous euro zone bailouts. The bailout looks set to push Cyprus deeper into an economic slump, shrink the banking sector and cost thousands of jobs.

European leaders said the bailout deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

Many Cypriots say the deal was foisted upon them by Cyprus's partners in the 17-nation euro zone within the European Union, and some have taken to the streets to vent their frustration.

CNBC's Michelle Caruso-Cabrera and Katie Slaman, and Reuters contributed to this report.

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Yiannis Kourtoglou / AFP - Getty Images

Employees of the Bank of Cyprus frown as they demonstrate outside the main office of the bank in Nicosia on Tuesday.

NICOSIA, Cyprus - Anguished Cypriots fear a run on banks when branches on the tiny tax haven reopen for first time in almost two weeks on Thursday.

Since March 16, customers have only been able to withdraw limited amounts of cash from ATMs after banks closed to allow Cypriot officials and European leaders to hammer out a 10-billion euro ($13-billion) rescue meant to avert a chaotic national bankruptcy.

However, some believe the deal will instead push the country further into economic crisis as thousands of bank employees lose their jobs. The country's unemployment rate is about 14 percent.

Under the terms of the EU bailout, accounts of more than 100,000 euros ($128,460) at the islands' two biggest banks will be frozen. Depositors with accounts at Laiki Bank, which is being liquidated, won't get paid for years and won't get all of their money back. CNBC sources estimate those with bank accounts in Laiki above 100,000 euros could lose 40 to 70 percent of their deposits.

Deposits above 100,000 euros with the Bank of Cyprus will be frozen and 40 percent of each account will be converted into bank stock. Accounts in both banks with balances under 100,000 euros will be fully protected.

Many Cypriots say they do not feel reassured by the bailout deal and are expected to besiege banks as soon as they open their doors Thursday.

"We have an uncertain future in in Cyprus," said Chris Sofroniou, as he waited in an ATM line in Nicosia. "There's uncertainty in our future in our children, and we are very, very disappointed with the European Union. We are being treated like third-class citizens and we are very, very angry."

A spokeswoman for the island's central bank said banks would not reopen until 12 p.m. local time (6 a.m. ET) on Thursday, according to Reuters.

The spokeswoman said banks would open their doors between midday and 6 p.m. (1600 GMT). The Cypriot authorities are expected later on Wednesday to detail the capital controls they plan to impose to prevent a flight of funds. 

The last-minute deal was reached Monday, just hours before the EU was due to cut off the country’s financial lifelines.

Katia Christodoulou / EPA

A woman walking past a boarded up branch of the Bank of Cyprus branch in Nicosia on Wednesday.

The agreement ended a week of protests in Cyprus, long lines at cash machines, and a tense geopolitical standoff after European officials made the unprecedented demand that ordinary Cypriot savers share in the cost of any bank bailout.

Cyprus promoted itself as an offshore financial haven by making depositing money there attractive to foreigners. The result? A financial sector that dwarfed the rest of the economy.

Without that deal, Cyprus’ banks would have collapsed, dragging down the economy and potentially pushing it out of the euro zone.

'Extremely unfair'
While the country’s president, Nicos Anastasiades, called the deal “painful” but essential, Nobel laureate economist Christopher Pissarides said the bailout was “extremely unfair to the little guy.”

“For the first time in the euro zone, depositors are (being) asked to bail out failing banks," he said. "Now that used to be the case in the 1930s, especially United States (and) caused big bank runs. It has been decided since then that we shouldn’t allow that to happen again.”

Finance Minister Michael Sarris said that the government was implementing measures to halt a run on the banks when they opened on Thursday, although he did not go into detail, according to Reuters.

It isn’t only bankers and the wealthy who are angry, however. On Wednesday, around 3,000 high school students protested the plan agreed to with the European Union, International Monetary Fund and European Central Bank.

"They've just got rid of all our dreams, everything we've worked for, everything we've achieved up until now, what our parents have achieved," a student named Thomas told Reuters. 

So as Cyprus waited to see what Thursday would bring, citizens mourned what they saw as the end of an era. 

“It’s the destruction of the country,” Cypriot Aristos Sardi said. “Who they think they are? For this country the colonial days finished in the 1960s.”

“I am heartbroken,” he added.

NBC News' F. Brinley Bruton, Reuters and The Associated Press contributed to this report.

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Hasan Mroue / AFP - Getty Images

Cypriot protestors outside the parliament in the capital, Nicosia, on Tuesday.

Banks in Cyprus will remain closed until Tuesday as the country tries to avert financial meltdown after rejecting the terms of a controversial bailout, turning instead to Russia for help.

An official said banks, which been shut for days amid fears of a run on savings, will stay closed on Thursday and Friday, CNBC and Reuters reported. Monday is a public holiday.

Earlier, Germany said the banks were effectively insolvent and might never open at all unless Cypriot political leaders accepted a bailout deal.

Thousands of Cypriots withdrew savings after the unexpected European Union announcement that it would provide $12.9 billion in exchange for up to 10 per cent of the value of all bank deposits – a move that would have thrown the Mediterranean island a lifeline but hundreds of thousands of citizens out of pocket.

Germany's finance minister, Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached.

Greek media reports suggested the Cyprus Popular Bank had been sold to Russian investors, but the Cypriot government denied such a deal, Reuters said.

German Chancellor Angela Merkel said the ball was now in Cyprus' court. "I regret the vote of the parliament yesterday," she told reporters. "But of course we respect it and will now look to see what proposals Cyprus makes.

"From a political point of view, I say that Cyprus needs a sustainable banking sector. Today's banking sector is not sustainable," she added.

Alexander Nemenov / AFP - Getty Images

Cypriot Finance Minister Michael Sarris outside the Russian Finance Ministry in Moscow on Wednesday.

Even before the deal was rejected, Cypriot Finance Minister Michalis Sarris was already in Moscow working on an alternative plan to extend loans by using the island’s natural resources as a guarantee, according to English-language Cyprus Mail newspaper.

The crisis leaves the 17-nation Euro currency zone in uncharted territory: Greece, Portugal, Ireland, Spain and Italy have all accepted austerity cuts in return for aid.

Cyprus’ parliament rejected the deal late Tuesday when 36 lawmakers voted unanimously against it and the ruling party abstained, Reuters reported. Outside the parliament, hundreds demonstrated, chanting: "They're drinking our blood."

"The voice of the people was heard," jubilant 65-year-old retiree Andreas Miltiadou told Reuters after the vote.

Ivan Tchakarov, chief economist at Renaissance Capital, told CNBC that Russia, which was enraged by the unexpected European deal, could step in to save Cyprus from total financial collapse.

"This situation presents a fantastic opportunity for Russia and even President Putin to take moral high ground and to extend another loan to Cyprus and to become a savior of Europe," he told CNBC in Moscow.

"At the end of the day we're only talking about an additional seven to eight billion dollars of additional money that is needed to have a complete package for Cyprus, this is small change for Russia.”

Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors.

Russia wasn’t the only critic of the deal, which was greeted with widespread dismay among global money markets. In an editorial, Bloomberg said it was the “worst” decision of the entire regional financial crisis, while the Economist panned it as "unfair, short-sighted and self-defeating."

Reuters contributed to this report.

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Yorgos Karahalis / Reuters

Demonstrators raise their arms in protest as Cypriot President Nicos Anastasiades's convoy drives to the parliament in Nicosia, Monday.

LONDON — Banks in Cyprus will remain closed until Thursday to prevent panic withdrawals in the wake of a surprise bailout plan that has sent money markets into a tailspin, the country's government announced Monday.

Ministers met Monday to revise a plan to seize up to 10 per cent from bank accounts held on the Mediterranean island — the price of a deal, brokered by the European Union and the International Monetary Fund (IMF).

Cypriots and foreign investors emptied ATMs following Saturday’s unexpected 10 billion euro ($13 billion) deal under which savers must surrender up to 10 percent of bank deposits. Banks in Cyprus were due to remain closed because of a public holiday Monday.

A debate on the measure has been delayed until Tuesday. Meanwhile, the country’s banks, already shut on Monday for a bank holiday, will remain closed on Tuesday and Wednesday to avert any panic.

Adding to the uncertainty, Greek media reports on Monday suggested Russian energy giant Gazprom might offer Cyprus an alternative to the bailout. 

Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Moscow has already given the Mediterranean country a sovereign loan to ease its financial crisis.

Russia’s president Vladimir Putin criticized the bailout as "unfair, unprofessional and dangerous," Reuters said, citing a spokesman.

The Economist also criticized the deal, describing it as "unfair, short-sighted and self-defeating."

Financial markets in Europe fell sharply in early trading Monday following the surprise announcement of a levy on bank accounts in Cyprus as part of a financial bailout.

Markets in Italy and Spain — countries regarded at the highest risk of further financial crisis – saw some of the biggest share falls, particularly in the banking sector.

Katia Christodoulou / EPA

A woman unsuccessfully attempts to withdraw from a Cypriot bank ATM in Greece on Sunday.

"It's a Cyprus shock,” Ken Hasegawa, a commodity sales manager at Newedge in Tokyo, told Reuters.

The bailout caused dismay in Cyprus. "They shouldn’t touch the deposits. They’re just killing the people," 58-year-old Miltiades Papamiltiades, an unemployed former construction worker, told the English-language  Cyprus Mail news site. "No one will ever deposit money again into the banks on the island. It is the end of our economy," he added.

Of the $90 billion deposits held in Cyprus banks, a little under half is held by non-residents, mostly Russian.

Alex Spillius, of the U.K.’s Daily Telegraph, reported that Cyprus in recent years had become, like off-shore haven Monaco, "something of a sunny place for shady people." He wrote:

"By 2011, the IMF reported that the assets of Cypriot banks were equivalent to 835 per cent of annual national income. Some of that was down to investment by foreign-owned banks, but most was Cypriot.

This imbalance might have been sustainable had the country’s two largest banks not made loans to the Greek government worth 160 per cent of Cypriot GDP. It has never been clear whether that risk was taken out of ethnic solidarity, or from a presumption that the Greeks knew what they were doing. But in any event, it was disastrous."

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Hellenic Republic Asset Development

The Afantou property consists of two neighbouring beachfront land plots located in the Afantou area of the island of Rhodes. The Rhodes International Airport, the city of Rhodes and the Rhodes Hospital are only 20 km away. Both plots are very close to the Rhodes-Lindos Highway, the major road artery of the island.

Got some cash to spend? How about a piece of the Greek islands of Rhodes or Corfu? Or a royal palace, a marina, or even a consulate building?

As Greece is struggling to appease international lenders and live up to the conditions of its bailout, the debt-choked nation is speeding up the sale of state assets by expanding its privatization program.

Hellenic Republic Asset Development

International Broadcasting Center (IBC – Golden Hall) in Athens, Greece.

Greece’s state fund (Hellenic Republic Asset Development Fund or HRADF) now has more than 70,000 state-owned properties on offer for investors and it aims to generate 19 billion euro ($24.5 billion) by 2015 via the sales.

The state’s properties include a 119,800 square-meter peninsula with a palace hotel complex and a marina, a 450,000 square-meter area in Rhodes with an 18-hole golf course and four miles of beach, a coastline in Corfu, an airport area in Athens and the 2004 Athens Olympics broadcast center.

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Apart from land areas, Greece is also offering its government buildings. Greece's ministries of justice, health, education and culture are seeking to rent out some of their buildings, and although the country is coping with rampant tax evasion, 13 of its tax offices are on offer for privatization as well.

CNBC: Which country has the lowest debt in the euro zone?

But Sam Zell, U.S. real estate mogul and chairman of Equity Group Investments, told CNCB that a similar retail property would cost “dramatically less” in the United States and added that he was not familiar with the Greek commercial real estate market.

Privatization wobbles
Greece’s plans to launch a privatization program have been postponed several times because of the country's political uncertainty, but a source at the state fund told CNBC it is ready to make up for this “wasted time.”

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So far the privatization fund has raised less than a tenth of the targeted amount. Investors have not been rushing to lease the state’s assets because of the “fog around the Greek economy” and worries the assets could be devalued further if Greece were to exit the euro zone.

Lamda CEO Athanassiou described the program as Greece’s last chance to be a successful country.

Complete World news coverage on NBCNews.com

He also noted that the Greek government has not exploited the full potential of its tourism and new energy industries.

“There are so many resources and opportunities in Greece. It's not a matter of a poor performing private sector or a lack of resources, but how the state is operating,” he said.

Read this story on CNBC.com 

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Paul Hanna / Reuters

An injured protester shouts as she is detained by riot police during clashes between supporters of Spanish coal miners and riot police in Madrid on Wednesday.

MADRID -- Spain announced a 65 billion euro ($79.85 billion) austerity package that includes tax hikes and spending cuts on Wednesday, a day after it won approval from its euro partners for a huge bailout of the country's stricken banks.

Prime Minister Mariano Rajoy told parliament the country's future was at stake as Spain grapples with recession, a bloated deficit and investor wariness of its sovereign debt. He said the nearly $80 billion in savings will be achieved through 2015 by a hike in sales taxes and a series of spending cuts through 2015.

"We are living in a crucial moment which will determine our future and that of our families, that of our youth, of our welfare state," Rajoy said. 

"This is the reality. There is no other and we have to get out of this hole and we have to do it as soon as possible and there is no room for fantasies or off-the cuff improvisations because there is no choice," he added.

Spain's economic crisis turns middle-class families into illegal squatters

Spain's unemployment rate is more than 24 percent overall and 50 percent for young people. 

"What motivates us is the five million people out of work," the BBC News quoted Rajoy as saying.

Wednesday's increases in sales tax include a hike to 21 percent on products and services like clothing, cars, cigarettes and telephone services to 21 percent, and increase to 10 percent on goods such as public transport fares, processed foods and bar and hotel services. The sales tax on basic goods like bread, medicine and books stays at four percent.

The increases were widely expected but go against campaign pledges Rajoy made before he was elected in November and since he came to power.

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Other measures outlined Wednesday included:

• further cuts in government spending beyond the reductions already outlined in the 2012 budget
• wage cuts for civil servants and members of the national parliament
• further closures of state-owned companies
• tax deductions for homeowners to be scrapped
• a 30 percent cut in the number of town councilors
• changes to unemployment benefits designed to encourage jobless people to seek work quickly.
• 20 percent cut in government subsidies to political parties and labor unions.

Deadline to meet targets extended
On Tuesday, eurozone ministers agreed to grant Spain an extra year until 2014 to reach its deficit reduction targets in exchange for further budget savings and set the parameters of an aid package for Madrid's ailing banks.

The decisions were aimed at preventing the currency area's fourth largest economy, mired in a worsening recession, from needing a full state bailout which would stretch the limits of Europe's rescue fund and plunge it deeper into a debt crisis.

"The Eurogroup supports the recently adopted Commission recommendation to extend the deadline for the correction of the excessive deficit in Spain by one year to 2014," ministers said in a statement.

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No final figure was agreed for aid to ailing Spanish lenders, weighed down by bad debts due to a housing crash and recession, but the EU has set a maximum of 100 billion euros ($123 billion) and some 30 billion euros would be available by the end of July if there was an urgent need.

A final loan agreement will be signed on or around July 20, Eurogroup chairman Jean-Claude Juncker told a news conference.

PhotoBlog: Faces of Spain's economic crisis

In one key decision closely watched by investors, ministers agreed that once a single European banking supervisor is set up next year, Spanish banks could be directly recapitalized from the euro zone rescue fund without requiring a state guarantee.

That fulfils an EU summit mandate to try to break a so-called "doom loop" of mutual dependency between weak banks and over indebted sovereigns, but represented a climb-down for hard-line north European creditor countries.

In a nine-hour marathon meeting ministers of the 17-nation eurozone also settled a series of long-delayed appointments.

As ministers were meeting, a top ECB policymaker warned that Europe's debt crisis was now more acute than the 2008 financial turmoil that felled U.S. investment bank Lehman Brothers.

"The eurozone crisis is now much more profound and more fundamental than at the time of Lehman," ECB Executive Board member Peter Praet told a conference in Lisbon.

The Eurogroup ministers were tasked with fleshing out a bare-bones agreement reached by EU leaders at a summit last month on establishing a European banking supervisor and using the bloc's rescue funds to stabilize bond markets.

But differences persisted between north European countries such as Finland and the Netherlands and southern states led by Italy and Spain.

Msnbc.com staff, Reuters and The Associated Press contributed to this report.

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Xavier Cervera / Panos for msnbc.com

Tony Cortes, who has been out of work for almost three years, and his partner Ana Valderrama have occupied an empty home in Terrassa, Spain, with their young daughters Jennifer and Ariadna.

TERRASSA, Spain -- Ana Valderrama and Tony Cortes do not look like squatters.

The suburban apartment they've illegally occupied since December is free of clutter. Its stone floors shine while two poster-sized pictures of daughters Jennifer, seven, and Ariadna, 11, hang on gleaming white walls.

Twelve months ago, life was very different.

Valderrama, 36, and Cortes, 38, had both been out of work for more than two years. Unable to maintain payments on their 102,000-euro (around $128,000 at today’s exchange rates) mortgage, the couple lost their home in this commuter town about 12 miles north of Barcelona.

"I was very depressed when I realized I may be on the street with my two girls," Cortes told msnbc.com. "It’s a depression the whole family feels, a sort of Chinese torture."

Desperate to ensure they had a roof over their head, Valderrama, Cortes and 10 other families took possession of an empty apartment building. But life is still precarious. The family of four now lives on 641 euros ($800) a month in public assistance and they could face eviction at any time.

Destitution
While sophisticated and fun-loving Barcelona serves as the country's showcase to the world, Terrassa is among the many towns hiding Spain's shame: Despite boasting Europe's fourth-largest economy, hundreds of thousands have been forced into destitution by the country's housing crash.

Photos: Faces of Spain's economic crisis

Many Spaniards now exist on the margins of a society that just a few years ago promised them easy access to cars, holiday homes, trips abroad and regular tickets to professional soccer games.

The crisis was born out of a mighty housing and construction bubble that saw house prices triple between 1995 and 2007. They've fallen by at least a quarter since then.

'The country is on its knees': Ireland grapples with economic collapse

About one out of every four people in Spain is without a job, according to government statistics. However, the large so-called "gray economy" mitigates the effects of unemployment, the IMF says.

In 2010, court evictions hit 100,000 – four times the total in 2007. About 200 homes are repossessed every day across Spain, according to the Platform for People Affected by Mortgages (PAH) campaign group.

These repossessions continue despite a voluntary ethical code signed by many banks that is intended to delay evictions by two years in cases of families with no income. Still, an estimated 20 percent of the country’s unoccupied homes are now owned by banks, The Economist reported.

You don’t have to look very far to see the toll the crash has taken on people who have worked all their lives.  

Before the crisis Juan Antonio Pache, 67, did not think of himself as poor.

His construction business once employed nine people. He borrowed money to build a house on land he already owned, and a few years later he borrowed more to extend it.

Xavier Cervera / Panos for msnbc.com

Juan Antonio Pache, 67, who lost a construction business that once boasted nine employees, is now receiving help from Catholic organization Caritas.

Pache's company thrived, he said, until 2007 when he noticed a fall-off in new business. By April 2008, income had decreased "vertically," he said.

"I made proposals, proposals and proposals but no projects came," he said. He fell behind on payments to Spain's equivalent of Social Security. Soon he could not afford his mortgage payments of around 3,000 euros a month.

Now the bank has seized his house and land. He has lost his business and lives with his son in Sabadell, a city northwest of Barcelona.   

He doesn't receive a state pension, and his wife has moved in with family in another town. 

"All I've done is work. I've worked day and night on the highways. And after so much work I have no house and no pension," he said, standing very straight. "I don't know what kind of country this is."

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With banks in a fierce competition for new customers and mortgages easy to come by, some borrowers doubtless took on too much debt during the boom years. But even as the crisis hit, politicians assured the public that all would be well.

In 2008, former Prime Minister Jose Luis Rodriguez Zapatero declared that Spain had "perhaps the most solid financial system in the world."

Infant malnutrition
The fact the crisis is taking a toll in a relatively wealthy part of Spain surprises those who work with the most vulnerable.

"We have noticed a huge increase in people asking for food assistance – around three times more than a year ago," said Ester Soto, a manager at Terrassa's Red Cross homeless shelter.

Xavier Cervera / Panos for msnbc.com

Aida Abello and Ester Soto work at a Red Cross homeless shelter in Terrassa, Spain.

Fraying family networks and swinging cuts in social programs, as well as the worsening crisis, are the likely reasons for this growth, she said.

More startlingly, the Red Cross is also seeing evidence of infant malnutrition for the first time in decades, Soto added.

"And this is not a poor town," she said.

Spain's financial plight has taken center stage for European Union leaders who are tackling long-term plans for closer fiscal and banking union in a bid to strengthen the euro's foundations, after bailouts for Greece, Ireland and Portugal failed to end a 2-1/2-year old debt crisis.

On June 9, the European Union stepped in with the promise of a bank-bailout plan of up to 100 billion euros ($125 billion) and Spain formally requested the rescue on Monday. The original announcement failed to calm nerves as investors worried that it might not be enough and a wholesale bailout of Spain could be in the offing.

Spain to seek bailout; up to $125 billion on table

Paul De Grauwe, a prominent economist and professor at the London School of Economics, said that not only would the bailout announced in early June probably be inadequate, it was unlikely that European Union’s response would help ease the suffering of millions of Spaniards.

He also said the European Union's decision-making process, which is propelled by economic powerhouse Germany, is deeply undemocratic.

"Today it is a German politician who decides about Spain," he said. "They couldn’t care less about the Spanish unemployed. They will only care about unemployment if it is German unemployment. They will only care about youth unemployment if it is German youth unemployment."

Germany grows weary of being Europe's crutch

'I want to work'
Spanish youth unemployment stands at 50 percent, the highest in Europe. Such statistics are a fact of life for university student Marisol Martin.

"I want to work, have money, be independent and have my own place," the 19-year-old said. "I go on the Internet, send out resumes and resumes but nothing."

The only opportunities for people like her, she said, are unpaid work experience positions or poorly paid jobs in bars or restaurants.

So she is taking English classes and hopes to one day leave Spain.

Xavier Cervera / Panos for msnbc.com

Marisol Martin, right, has been encouraged by her father to leave Spain. Her friend Laia Moreno also has little optimism about the future in her homeland.

"My dad’s told me and my sister that what I have to do is get out and go to England," she said.

Martin's friend Laia Moreno, 18, lives with her mother. "I would like to have my own place and my own life," she said.

"I wanted to be a teacher," she adds. But for now, that dream has died and she's trying to get a driver's license so she can deliver pizzas.

'I had to sell everything'
Life isn't much better for many immigrants, with the unemployment in these communities hovering at around 35 percent.  

Wilson Lopez left Ecuador more a decade ago in search of a better life for his wife and son. Nine years ago, he took on a mortgage of 109,000 euros, on which his wife Isabel and he made interest-only payments, Lopez said.

"I paid my mortgage loyally for nine years," the 63-year-old native of Guayaquil said during a protest organized by the PAH in Barcelona.

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In 2010, Lopez lost his job as a security guard in a local hotel.

"I had to sell everything – my wife's jewelry, our television, clothes – everything," he said.

Lopez would like to hand over the apartment's keys to the bank and have done with it, he said. But he can't because most homeowners in Spain can be pursued for mortgage debt even after their properties have been repossessed.

Xavier Cervera / Panos for msnbc.com

Wilson Lopez, 63, is originally from Ecuador.

Instead, Lopez felt forced to extend the loan for another 40 years. He pointed out wryly that he will be over 100 when it runs its course.

"The government works for the banks but it does not help the people," he said.

This sort of disillusionment has grown as people impacted by the crisis watch the government bailing out banks while imposing widespread cuts to public services.

Amid this backdrop, the Platform for People Affected by Mortgages (PAH) has sprouted branches throughout the country.

In the last six months, PAH has suspended or delayed dozens of evictions by protesting outside foreclosed homes and helping people negotiate with their banks. Their highly public campaign has fed a wave of defiance and forced the government to promise relief for borrowers.

But the organization is not "superman," warned PAH organizer Guillem Domingo.

"This country’s politicians need to step-up, be courageous," he said.

Spanish bailout may prove to be stopgap measure

Spain's "indignados" or M-15, which helped spark the global "Occupy" movement, is also flexing its muscles. While huge public protests have largely died down, the group, along with the PAH, has seen an opportunity in the country's estimated one million empty homes for the growing number of homeless.

And on June 15, activists filed a case against the former management of one of the largest lenders Bankia, whose partial nationalization helped push Spain to seek the EU bailout.

The mass movement has helped raise tens of thousands of euros via crowdsourcing to bring a case against the bank. 

Ghost towns tell the story of Ireland's faded dream

The apartment illegally occupied by Cortes and Valderrama is owned by CatalunyaCaixa, a regional bank. The unofficial residents' offers to pay rent to the bank have so far gone unanswered, PAH organizer Domingo said.

CatalunyaCaixa did not respond to a request for information or comment on their plans for the apartment building.

Still, defying the powers-that-be has energized Valderrama and Cortes.

"Every day that passes I feel stronger," Valderrama said. "I have gone through so much, and every time you do you become more powerful."

"I lost my shame many years ago," Cortes added and smiled.

The Associated Press and Reuters contributed to this report.

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