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.

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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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Andreas Solaro / AFP - Getty Images

Italians hold candles as they demonstrate against government policy in front of the Pantheon, in downtown Rome, on April 18, 2012. Trade union's anger is growing in Italy over the government's reform measures and public outrage over a series of suicides linked to the economic crisis.

ASOLO, Italy – On Tuesday, Generoso Armenante, a 49-year-old former security guard at a convenience store in the southern town of Salerno, left home after having lunch with his wife – and quietly found a secluded spot where he hanged himself. 

Armenante had been fired more than a year ago, and had been struggling to find another job ever since. Next to his body he left a letter: “I decided to end it because I am a failure. I can’t live without work.” 

Unfortunately, he is not alone. Tens of other Italians have also chosen to take their own lives in response to the strain of the economic crisis and the consequent austerity measures. 

On Tuesday, two other people committed suicide, apparently due to financial hardship. A 60-year-old businessman in Milan hanged himself from a tree after failing to repay his debts.

And a 64-year-old bricklayer in Salerno, who lost his job around Christmas, shot himself in the chest. He left a similar message: “I can’t live without a job.”

The three men are casualties of the debt crisis that has pushed Italy’s economy to the brink over the past year and put considerable strain on most Italians, especially those who own or work for small businesses. At least 34 people have killed themselves citing economic reasons since the start of the year, according to the Italian Association of Small Businesses. 

‘If my business fails, I fail with it’
A dramatic hike in taxes, combined with large cuts in public spending, a clampdown on tax evasion and a credit crunch from banks have pushed many Italian businesses to the brink of bankruptcy. 

Some have stuck to the old Italian script, griping about the government measures at the local cafe over a cappuccino and hoping for better times. But others have seen no way out, and have opted for death.  

The most affected region is the relatively prosperous Veneto in the northeast of Italy, home of Venice and an abundance of businessmen. 

Gianfilippo Oggioni / AP

Tiziana Marrone, right, widow of Giuseppe Campaniello, whose his picture is carried on a banner in background, and Elisabetta Bianchi take part in a demonstration to protest against Italian Premier Mario Monti's austerity measures, in Bologna, Italy, on Friday, May 4, 2012. Marrone and Bianchi claimed that their husbands committed suicide because of economic crisis.

In a part of the country that has had a reputation for skilled merchants since Venice was a maritime republic, as many as one in 10 own their own business. Some of the most recognized Italian brands, such as Benetton and Diesel, originate from the area. 

“My business is like my family,” Massimo Zappia, who owns a window frame business in Asolo, a town about 20 miles north of Venice, told NBC News. “I feel responsible for each of my employees. If my business fails, I fail with it.” 

Zappia, 42, blames the credit crisis for some of his woes as a small business owner.  “These days it takes six months for banks to make their mind up for small loans of just a few thousand dollars. And as a businessman, I feel left alone.” 

Struggling to ‘soldier on’
This feeling of failure and loneliness is at the very heart of acts of desperation among the business community in Italy. The message left by Armenante, the security guard who hanged himself on Tuesday is the same mantra repeated by workers and businessmen who either tried to kill themselves and lived to tell the tale or by those who thought about trying, but found other reasons to live. 

Giovanni, who is in his mid-40s and also lives in Asolo, admits that he thought about ending his life after failing to repay a debt of $25,000. The self-employed plumber, who asked that his last name not be used, told NBC News that he only stopped himself because he didn’t want his family to pay for his mistakes, adding that he has a disabled son and a wife with a history of psychological problems.

“It was a dark moment, and I thought there was no way out,” he said. “They strangled me economically; I just can’t keep up with repayments. I got to the point where I couldn’t go back home and look at my wife and children in the eyes, and tell them I didn’t know how to carry on,” he said. 

“There are moments when you think that there is an easy way out. It only takes a moment to die. But then you think of your family and you realize you can’t. You just need to soldier on.”

To help ease the problem, a workers’ association near Asolo started a helpline for people in distress. They received at least 60 calls in their first two months of activity, but say that it’s worried families who tend to call rather than the businessmen themselves. 

“It’s their wives that call the most, because businessmen around here are very proud,” said Stefano Zanatta, president of Confartigianato Veneto, a local business association. “They wouldn’t admit to having a problem until it becomes so big they can’t tackle it anymore.”

Some, however, do call. “Once we got a call from a businessman who couldn’t even afford to send his daughter to school,” Zanatta said. “We offer them psychological support and financial advice before it’s too late.” 

Zanatta says that he expected a dramatic hike in the number of calls during the month of June. That’s the deadline for filing tax returns in Italy, and the time when many businessmen may realize they just can’t survive the economic crisis.  

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Reporter's Notebook  
 
ATHENS – When you touch down in Athens, the signs of an economic slump are immediately evident. The arrivals hall in the domestic terminal is almost deserted, with flights within Greece having been cut back by about 25 percent. Outside the taxi pick-up point stretches a long line of yellow cabs going nowhere. It is symbolic of Greece's economy – stretched and stuck.

On the ride into town the driver explains that he's been waiting for me for seven hours. I was his second and last fare of the day.

Greece still holds the magic of an ancient Mediterranean country. The Acropolis, its columns lit majestically at night, juts grandly above Athens. It is a testament to one of the world's great civilizations.

But down here on the street, there is fear that Greece is unraveling as a modern state.

‘Economic death spiral’
You don't expect to see so many hungry people in a major European city. They line up each day looking for a handout in the soup kitchens and bread lines run by the municipality. But the 40 workers under contract to prepare a basic lunch of pasta and bread say they will lose their jobs in June because the city has run out of money to pay them.

A shoe shine man sits in front of a closed shop in central Athens Wednesday.

Essentially, the country is broke. And to borrow enough money to stay solvent, the Greek government has agreed to severe austerity measures imposed by the European Union, European Central Bank and the International Monetary Fund. The money will run out next month unless another chunk of the bailout is handed over. But the European Union wants even more cuts in government job, salaries and benefits.

Public employees have already taken a 40 percent pay cut and pensions are being reduced. The private sector has also been hit and unemployment is nearing 20 percent. A staggering 40 percent of youths between the ages of 18 and 24 are without jobs.

Take, for instance, Leo, a 64-year-old painter of religious icons for devout Greeks and tourists. His business dried up. The money ran out and he ended up living on the street. Evicted for not paying rent, Leo, who didn’t give his last name, took warm clothes, books and ten boiled eggs to his new home – a metal bench near a park in central Athens. He spent 45 days in the open with what he called the “unhappy homeless.” 

What makes Leo unhappy is the realization that the government is to blame. "They borrowed," he said. "Every time they needed money they borrowed and then borrowed some more."

Successive Greek governments borrowed an estimated $498 billion, in essence to bribe the Greek people into being happy. Governments who could offer cushy office jobs, fat pensions and long vacations got re-elected. It made perfect political sense, but it was economic suicide.

A businessman in the aviation industry described the country, "as gripped in an economic death spiral."

Enough to make you sick
Yiannis Varoufakis, a professor of economics at Athens University was just as blunt when he told me, “This is Greece's Great Depression. If you look at the statistics it is indeed a deeper slump than what Greece went through in the 1930s.”

John Kolesidis / Reuters

A man reads a newspaper in an empty souvenir shop in the Monastiraki tourist area in Athens on Wednesday.

Imagine for a moment taking a 40 percent pay cut. Then suffer an increase in sales tax to 23 percent. Add on increased rates for electricity, a new tax on heating oil and the cost of a gallon of gas hitting almost $10. Oh and your pension is not secure, and your kids stay home because there aren't enough teachers. It is enough to make you sick.
 
And that's precisely what the Greeks are doing. Getting ill. Hospital admissions are up 25 percent. At the same time hospital budgets have been cut 40 percent so there are shortages of medicine and staff.

Nikitas Kanekis is the director of Doctors of the World, a charity that runs health clinics. He has the genteel manner necessary to be a pediatric dentist, but the economic decline has unsettled him. "We have seen four times the number of Greek patients over the last year,” he said. “We are afraid the humanitarian crisis can develop into a humanitarian catastrophe."

It may already be happening. The department of health reports that suicides are up 40 percent. And violent crimes including murder are up almost 100 percent.  “We have all the characteristics we see in big cities in the Third World,” said  Kanekis. “People with no shelter, starving people and people looking for doctors and medicine."

Fears about what may come next
Greek coalition leaders are meeting Wednesday to prepare their response to a draft deal on steep cutbacks demanded by creditors in return for a $170 billion bailout that could protect the country from looming bankruptcy.

They need the money to stave off crunch time on March 20 when a big bond redemption payment is due. Without the bailout, they risk a default that could send shockwaves throughout financial markets and the global economy.

No one is certain it will happen. To receive the previous handout, Greece promised to cut 30,000 public-sector workers, but only 1,000 have been let go. The government also promised to sell off 65 billion euros in state owned assets. So far only 2 billion have been sold.

The government is trying to raise money through increased taxation. There's a new property tax that is collected through the state-owned electric company. If you don't pay the tax your electricity is cut off. There's a luxury tax to hit the wealthy – a 30 percent tax on sports cars and yachts. There's even a tax on private swimming pools. The government is reportedly using Google earth to pinpoint pools even as some Greeks are said to be using camouflage nets to hide them.

Even the Greek Orthodox Archbishop Hieronymos II of Athens and All Greece, who rarely comments on issues not related to the church, is worried.  “The unprecedented tolerance of the Greek people is being exhausted, rage pushes fear aside and the danger of social upheaval cannot be ignored anymore,” he warned in a letter sent to interim Greek prime minister.   

The origin of the words tragedy and economy are Greek. In this crisis, they are too close to home.