Spanish municipal debt

Spanish towns in hock as banks cope with $250B in bad loans

The 241 residents of the tiny northwestern Spanish village of Peleas de Abajo used to be proud of the fertile land and pine tree groves surrounding their red-roofed stone homes. But none of that belongs to them any longer.

Pressconnects,

26 April, 2012

"Everything (the village owned) was confiscated and sold at auction," says Felix Roncero, mayor of the hamlet since 2011.

Peleas de Abajo may be the most indebted village in a country with a growing budget deficit brought on by years of buying and spending on credit that is drying up.

Across Spain, towns and villages are selling off assets, raising taxes and cutting budgets to avoid bankruptcy. Spain's banks are seizing mortgaged property and selling it off to overcome nearly $250 billion in bad loans on their books.

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