Espana

Spain's unemployment is over 20%.

This is a result of Spanish House Prices going through the floor.

So the unemployed are not paying their mortgage. Bad for banks right (?). Nope, the insolvent Spanish Government to the rescue.

http://www.reuters.com/article/2011/07/01/spain-mortgages-idUSLDE75S0L820110701

MADRID, July 1 (Reuters) - Spain announced measures on Friday to help those struggling with high mortgage payments, but consumers said the moves gave limited relief for Spaniards mired in housing debt after the country's housing bubble burst.

The Socialist government, facing almost certain defeat in general elections that could come as soon as November, said it will increase the amount legally set aside for a debtor's own spending needs when banks start reclaiming funds.

"The amount excluded from any seizure of property will rise to 960 euros ($1,360) per month from just over 700 euros previously," the government said in a statement after Friday's cabinet meeting 

Spaniards, fed up with high unemployment and austerity measures imposed to placate international markets, have taken to the streets calling for changes in the political system and more equality in society.

Banks in Spain have the right to repossess properties and evict owners when they fall behind on debt payments, and the debtor continues to be liable for any shortfall between the value of the property and the mortgage debt.

The value of Spanish mortgage debt roughly doubled in the five years to 2009, as Spaniards leapt onto a bandwagon driven by easy lending conditions and rapid price rises.  (Sound familiar??)

Although bad mortgage debt is only about 2.5 percent of the total, according to Bank of Spain data, many Spaniards are having difficulty making ends meet.

"These measures will help so few people as to be insignificant," said Manuel Pardos, chaiman of banking customer association ADICAE.

ADICAE estimates that more than 1 million families face severe mortgage payment problems -- around 300,000 whose loans have been foreclosed, another 300,000 in the process of foreclosure and around 500,000 having difficulty making payments.

"(Debtors) who are still working have very low wages, and many of them are not working at all, so they have no income," said Pardos. Many Spaniards are eating in soup kitchens so they can make their mortgage payments, he said

Spanish Government Debt.

Who is holding the can?

You can see from the above chart, the Spanish situation dwarfs that of of Greece.