(SMH) Robert Tornabell–Real estate frenzy of the '90s has come back to haunt Spain's banks

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 increased the amount of land for development. Developers got rich, selling the idea that property would always go up in value. You could buy a flat on the Mediterranean for $156,000 and sell it the next day for $234,000; by the end of the month it would be worth $390,000…..

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Economy, Europe, Foreign Relations, History, Housing/Real Estate Market, Politics in General, Spain, The Banking System/Sector