Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

And then, as if to compound the political upheavals of May, the last aftershock of the real estate crisis struck, in Spain. Along with Ireland, Spain had the distinction of experiencing one of the most extreme housing bubbles in the world. When that burst, the effect, as in Ireland, was devastating. The difference is that Spain is big—with a population of more than 45 million, compared with Ireland’s 4.5 million. Before the crisis, Spain’s economy was comparable in size to that of the state of Texas. So the bursting of the Spanish bubble was an event of macroscopic proportions. As the housing market collapsed, Spain’s unemployment rate shot up. Of the 6.6 million increase in unemployment in the eurozone between 2007 and 2012, 3.9 million was accounted for by Spain—60 percent of that grim total. As bad as Greece’s situation was, it was small by comparison and accounted for only 12 percent of the increase in eurozone unemployment. Most catastrophic of all was Spain’s youth unemployment rate, which by the summer of 2012 had surged to 55 percent.26 Even allowing for an extensive black economy, it was a deeply dismaying statistic.