Miguel Sebastián, a high-ranking Minister from the boom years, reveals the Government of the day was not prepared to stop the real estate party once it got going, and probably wouldn’t have been thanked for doing so anyway.
In an interview with Efe, reported in the Spanish daily El Mundo, Miguel Sebastián, – former Industry Minister in the Zapatero Government (in office 2004 – 2011) – said the Government never considered “spoiling the party” of the Spanish real estate bubble, which at the time only seemed like a theoretical risk, the popping of which would have destroyed a hundred thousand jobs immediately.
Promoting the publication of a new book entitled La Falsa Bonanza (The False Boom), Sebastián explains it wasn’t easy at the time to diagnose a bubble, as you can’t be sure bubbles exist until after they burst. He also reveals that, whatever they claim now, the Bank of Spain denied the existence of a bubble “for years, especially in the period from 2000 to 2004, when the bubble inflated” with the help of the Land Laws (Ley de Suelo) introduced by the previous Government (run by the Partido Popular of José María Aznar).
PEOPLE WERE HAPPY
In defence of the administration of the time, Sebastián points out the options were limited when trying to cool down the real estate party without bursting the bubble. But most of all, any move to end the party “would have provoked an enormous reaction,” because Spaniards were basically “happy with the bubble” he claims. And it wasn’t just the construction sector that was doing well out of the property boom, so too were banks, companies, utility providers, and media companies, to name just some.
Explaining how difficult it would have been to “turn off the music in the middle of the party,” Sebastián says more work has to be done “a priori” to avoid bubbles using “all the fiscal, monetary and regulatory artillery possible.”