• So much for 'the Spanish dream': Euro crisis turns suburbs into ghost towns

    Pierre-philippe Marcou / AFP - Getty Images, file

    Empty buildings in Valdeluz, one of 12 near ghost towns scattered across Spain.

    By Ian Johnston, msnbc.com

    Just north of Spanish capital Madrid lies Cuidad Valdeluz. Built during the country's economic boom, it was promoted as a suburban family paradise for tens of thousands of people. 

    Today, it is one of 12 near ghost towns in Spain, a country that -- despite being the European Union's fifth-largest economy -- is teetering on the brink of a Greece-style meltdown. 

    Spain has the highest unemployment rate of all European Union countries at 21.7 percent, according to a report published this month by the Center for Economic and Social Rights. Among those aged under 25, nearly half -- 46.4 percent -- are without a job. More than half a million households had no one earning an income in 2011.

    NYT: One-fifth of Spain's GDP is now black market

    The report warned that "over half the population reports experiencing a heavy financial burden due to housing costs." The number of foreclosure proceedings rose from 25,953 in 2007 to 93,319 in 2009, an increase of nearly 260 percent.

    As she stood on the deserted streets of Valdeluz, journalist Lindsey Hilsum of the U.K.'s Channel 4 News said the suburb illustrated just how far and how fast Spain had fallen.

    On the streets of Madrid, they have a message for the leaders meeting in Brussels: stop cutting and start promoting growth. For them, the Spanish government decision to recapitalise Bankia, the country's fourth largest lender, while reducing education spending by 20 per cent, was the last straw.

    "This was the Spanish dream: new developments, luxury apartments, the good life. But it was all on borrowed money. Now the developers have lost their investments, the banks are in crisis, and increasing numbers of Spaniards are homeless," she said.

    Homeless and 'in debt forever'
    Maria Francisca Cano Munoz, Jesus Munoz Alcaza, their daughter and disabled son are among those about to lose their home.

    CNBC's Simon Hobbs discusses the euro's decline and whether Greece will leave the euro, with CNBC's Michelle Caruso-Cabrera and Bob Pisani.

    "We are going to end up with no home and in debt forever," Munoz Alcaza, an unemployed construction worker, told Hilsum through a translator. "We'll have to keep paying for this apartment, but we won't be able to live in it."

    Greece's debt woes put Europe on financial knife edge

    "At first they [bank officials] were nice and said 'Don't worry, you can pay at the end of the month to avoid interest,'" Cano Munoz added. "But when you cannot pay at all, suddenly you are a bad person and 'there's the door... go!'"

    As in Greece, politicians are looking to economic powerhouse Germany for help.

    Many residents fear that a slow economy is cutting into the number of foreign visitors. NBC's Stephanie Gosk reports.

    "Germany has got a lot of profit from the euro [currency]. Because Spain was rich, we bought many things that were made in Germany," an independent deputy in Spain's congress, Irene Lozano Domingo, told Hilsum.

    "We are all linked, so if we are going to hell, they are coming with us. This is what they have to see," she added.

    Greeks withdraw $894 million in a day: Is this beginning of a run on banks?

    Like other countries, Spain has bailed out its banks and slashed government spending. But the economy is now so bad that some are thinking of quitting the country altogether.

    "I don't know. Latin America somewhere? Brazil, Mexico ... somewhere where it's going up, you know?" a protester at a recent demonstration against education cuts told Hilsum.

    The euro is hitting its lowest level since July 2010. Discussing the impact the weak euro has on the global economy, with Larry McDonald, Newedge Group and John Spallanzani, GFI Group.

    European Union leaders concluded their latest summit early Thursday with few concrete steps to fix the continent's festering financial crisis, Reuters reported.

    One problem has been the need to get agreement between either the 17 EU countries that use the euro as their currency or all 27 member states.

    "I think about my one Congress, then I start thinking about 17 congresses and I start getting a little bit of a headache," Barack Obama said following the recent NATO summit in Chicago.

    The president's headache could get substantially worse, according to a report by the Organisation for Economic Co-operation and Development. It warned Tuesday that while the U.S. and Japan were leading a fragile economic recovery among developed countries, they could be blown off course by the European debt crisis.

    'Vicious circle': Europe crisis threatens world economy, OECD says

    The biggest continuing fear is that if Greece cannot be saved, other larger economies — like Spain or Portugal — might face the same fate. 


    The leaders gathered in Brussels recognized that Greece had endured significant hardships and promised to release development funds aimed at spurring growth, Reuters reported. 

    But Luxembourg Prime Minister Jean-Claude Juncker told reporters that the euro countries "have to consider all kinds of events," the news service added.

    Europe told to prep for Greek exit scenario

    Juncker insisted early Thursday that he had not asked the euro nations to prepare national contingency plans for a possible chaotic departure of Greece from the currency, saying the "the working assumption" was that Greece would remain part of the euro.

    But his statement was also a frank admission that Greece could wind up abandoning the euro.

    A new election is scheduled for June 17, as debate continues over the country's place in the euro zone. NBC's Stephanie Gosk reports.

    Greece's fringe political parties, which are threatening to renege on commitments made to secure bailout loans, saw their popularity surge in recent elections. No party has been able to form a government, and the country will vote again June 17. 

    Germany's Pirate Party rides wave of popularity

    Many analysts have said that Greece, already in its fifth year of recession, has no hope of recovery if it sticks to the spending cuts and tax hikes it agreed to in order to secure bailout loans. 

    "We want Greece to remain in the euro area," German Chancellor Angela Merkel said after the meeting, but she also expected the deeply unpopular policies of austerity to continue. "We expect that they will stick to the commitments that they have entered into." 

    Ghost towns tell the story of Ireland's faded dream

    The perception that European leaders lack the political will to tackle the continent's financial and economic problems has left markets on edge for weeks. Recession is spreading. Banks are under pressure.

    Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong, said Thursday: "Europe is not doing enough, and the market may not wait for them." 

    Reuters contributed to this report.

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  • Ghost towns tell the story of Ireland's faded dream

     

    Cathal McNaughton / Reuters

    Fencing placed in front of The Waterways, an empty and unsold housing development in the village of Keshcarrigan, County Leitrim, Ireland, on Jan. 28, 2012.

    Reuters photographer Cathal McNaughton reports on the lasting effects of Ireland's financial crisis:

    Cathal McNaughton / Reuters

    An electrical cable is used to secure a security fence surrounding Cnoc an Iuir, an empty and unsold housing development in the village of Drumshanbo, County Leitrim.

    "If you build it, they will come." The iconic quote from the film Field of Dreams seems like a rebuke to Ireland's misguided builders and planners as the depressing sight of rows of newly built empty houses – windows broken and doors flapping in the wind – stretch out in the distance.

    I'd come to Co Leitrim, in the west of Ireland, to see for myself the so-called ghost housing estates that first came to the public's attention four years ago as the Celtic Tiger collapsed leaving thousands of developers bankrupt and projects half finished. Surely in four years, something would have been done about this national embarrassment – so obvious a sign of the demise of Ireland’s once envied economy?

     But the only solution that seems to have been put into action is fencing off the estates – hiding the embarrassing problem behind huge sheets of wood – leaving the houses to crumble into disrepair away from the gaze of despairing neighbours who paid full price for an identical house just 200 yards away.

    Cathal McNaughton / Reuters

    Unfinished houses at The Waterways, Keshcarrigan.

     Hardly a town or village in Leitrim – the least populated county in Ireland and the worst affected by the over-enthusiastic builders – has been untouched. Pretty lakeside villages with perhaps just 200 residents now have 50 empty 'dream homes' in new developments where fading advertising signs boast of private moorings and roof gardens. Larger market towns have row upon row of once smart new town houses – clearly built with the upwardly mobile commuters who were supposed to move to the countryside as part of the government's largely ignored decentralisation project – now with brambles growing over the gardens, potholed roads unfinished and adorned with graffiti by the kids who use them as drinking dens.

    Cathal McNaughton / Reuters

    Fenced-off houses at The Waterways, Keshcarrigan.

    Impressive holiday homes with 'stunning sea views' lie vacant with at most one unlucky tenant sharing their ghost street with long-abandoned builder's rubble and broken advertising signs banging in the wind at night keeping them awake.

    Surprisingly many of the houses aren't even for sale any more – even if a buyer could be found in the precarious Irish financial market.

    One resident – the sole home owner in a once stunning lakeside development – explained. "These were all sold but the developer needed more money from the bank to finish it and they refused. He went bust and that was that."

    See more images on the Reuters Photographers Blog.

     

    Cathal McNaughton / Reuters

    The ironically-named Crest Of A Wave, an empty and unsold housing development in the village of Bundoran, County Donegal.