If you could peer into the very centre of the converging economic forces tearing at the fabric of Europe, you would find a small, politely bewildered man named Jaime Cadena.
This week, Spanish Prime Minister José Luis Rodríguez Zapatero became the latest European leader to announce huge cuts to government departments and programs in order to save his country from becoming another bankrupt victim of the continent's debt crisis. At the same time, Mr. Cadena discovered his own personal place in that crisis.
The 44-year-old construction worker sat at the folding table in the tiny living room of his basement apartment on the outskirts of Barcelona and tried to grasp the larger meaning of a letter from the bank informing him he no longer owned the property.
The apartment will be auctioned at a fraction of the price he'd paid for it four years ago, when his fast-rising salary seemed a sure ticket to middle-class stability for his family. If a buyer is found this week, he and his four teenaged children will be evicted. As Spain has no personal-bankruptcy law, he will still owe the bank almost €200,000 - more than the current market value of the apartment - even if he loses it.
"It's like a terrible weight I'm forced to carry," Mr. Cadena says. "I feel like the whole country's problems have fallen on my back."
With an unemployment rate of nearly 20 per cent, the highest in Europe, it could be a long time before he finds more than the occasional month-long construction job. But the spending cuts launched by Mr. Zapatero this week will likely lead to reductions in the welfare and unemployment-insurance programs that were Mr. Cadena's only hope of staying aloft until jobs materialize again.
Mr. Cadena's family are part of an estimated 1.4 million Spaniards now facing court action over unpaid mortgages. During the late 1990s and 2000s, a freewheeling mortgage market gave Spain the highest rate of homeownership in Europe and possibly in the Western world, at 85 per cent. But property values quickly collapsed across Spain - falling more than 40 per cent in Barcelona - at the same time as 2.5 million jobs were wiped out, so there are now a million Spanish families in which all the members are unemployed.
In economic terms, Spain's simultaneous property-bubble collapse and debt crisis mean the country will face years of adjustment to a lower living standard and a less generous government. Given the country's comparatively strong underlying economy, it does not face a Greek-style lender panic, but it will likely be more than a decade before its economy returns to its previous levels.
The new Europe
In human terms, it means millions of Europeans who had been given a foothold in the middle-class world of property ownership, secure employment and university education have now been plunged into lives of rented rooms, paltry minimum-wage jobs and dependency on an increasingly feeble state. Many face huge burdens of debt.
Map: Financial data by country
While it now seems likely the euro currency will remain intact after Germany and France acted to secure the debt of their faltering neighbours, and most economies will recover, there is a widespread sense this year's harsh austerity measures will mark the end of "the social Europe": the continent's systems of social safety nets, job-security guarantees and early-retirement protections that made middle-class life sustainable for those able to enter it.
In Spain, the government this week asked the people to share a major national sacrifice in order to prevent a disastrous future.
"I want to tell you that this is a transcendental moment for Spain, a crucial moment for its immediate future and for the coming decades," Mr. Zapatero told parliament on Wednesday. "We need to adopt measures to reduce the impact on our economy of the worst crisis we have known, and at the same time we need to drive forward the most intense economic transformation of our country in recent times."
Across Europe, governments are preparing enormous cutbacks. In Britain, Prime Minister David Cameron this month asked ministers to draw up plans for a 40 per cent cut in every department. Italy this week passed a budget cutting €25-billion over two years, and Ireland was warned by the International Monetary Fund that its brutal slashing may not be enough to keep debt in check.
But the relatively manageable fiscal crisis in many European countries - Spain's debt situation, like Britain's, is roughly comparable to the one faced by Canada in the early 1990s - is disguising a far more dire human situation that leaves millions of Europeans fearing for their future.
The middle-class dream
Mr. Cadena's case is typical in many respects. He is, along with one-10th of all Spaniards today, an immigrant - in his case from Ecuador - who worked hard for a dozen years, married, raised a family and was stably employed enough to became naturalized. A house seemed a logical next step; in fact, his neighbours told him, it was insane to continue renting.
In 2006, a Barcelona bank offered him a "free" mortgage - with no down payment - that was offered, signed and closed in one day. His salary of €1,100 a month was combined with his wife's earnings of €600, and the bank asked them to claim they worked weekends (they didn't) in order to make their income appear high enough to qualify them.
Before he had a chance to think about it, Mr. Cadena was given the keys to the apartment and a 2-centimetre-thick package of fine-print pages he either couldn't or didn't read, and was told the mortgage payments would be €900 a month, withdrawn from his account.
He had no idea how much he'd paid for the 3-bedroom basement apartment (only this year did he realize it was an extraordinary €253,000) or the interest rate (5 per cent above prime).
The monthly payments, he soon learned, were calibrated to rise over time, first to €1,100 euros and then, in 2009, to €1,600 - a mortgage structure, also popular in the United States, that only made sense under the assumption both the borrower's income and the house's value would rise quickly and constantly.
They didn't. The collapse of Spain's property bubble coincided with the rising mortgage rates faced by Mr. Cadena (and many others). In early 2009, his construction company cut his shifts to six hours per day; in November they folded completely.
His wife left him, apparently frustrated by his sudden loss of fortune, and he is now a single father watching over children aged 14 to 21 who face even worse prospects than him: Spain's youth unemployment rate is more than 40 per cent. Two years ago, he expected to be using his home equity to pay for post-secondary educations for them; now he is worried they might fall into gangs and drugs in an apartment neighbourhood that is becoming a ghost town.
Mr. Cadena spends his days looking for jobs, but so far this year, he has only had a month of steady work. Beyond that, he is dependent on the state. At the moment, unemployment-insurance payments give him €1,100 a month, but will end in November, a year after they began; after that, he will rely on welfare payments of €420 a month.
It is widely believed Mr. Zapatero will have to slash Spain's welfare and unemployment-insurance programs in order to meet his deficit targets, although he has refused to speculate on the possibility. If these benefits are cut, millions of people like Mr. Cadena will be thrust into even worse situations.
"I talk to hundreds of people in this position, and many of them just decide to take their own life," says Adria Alemany, head of a housing-rights group pushing for an end to the mortgage policies that cost Mr. Cadena his home. "And why not? What is there to live for? Fighting back for them is the only way to survive."
For Mr. Cadena, a surprisingly fit and cheerful man in the face of personal doom, survival is for his children. "I had my chance," he says, "and I hope they will do better in their time. I'll need the rest of my life to get out of this."
About the series:
The debt crisis has turned the formerly stable countries of Europe upside down. Even as the economy begins to emerge from recession, drastic efforts to avoid a debt and currency emergency have changed life in the Old World forever; ending ancient working traditions, rupturing families and communities and forcing long-dormant societies to seek new ways of getting by. Doug Saunders looks at the human effects of a continent's economic disintegration, visiting people and families in six countries at the centre of the crisis.
- Spain: Rising unemployment and plummeting housing prices create a perfect storm
- Ireland: The exodus returns
- Britain: Learning to make things again
- France: The lifestyle of the state
- Germany: In the vortex, a calculated calm
- Greece: Families moving underground
- Follow Doug on Twitter as he travels into the depths of the crisis
- Video reports from each stop
- Full coverage of the crisis