Spain: it's worse below the surface

Not only local authorities, but also mortgages.

The Wall Street Journal is stunned that handing in your keys won't cancel your mortgage debt, as apparently it does in the US (but not here). But it's worse there. You can't cancel mortgage debt by going bankrupt. So your mortgage debt may stay with you for ever, while court costs ratchet up. Eight per cent of Spain's homes are in negative equity and an estimated 1.4 million Spaniards could face foreclosure proceedings.

Surely government will have to make defaulters' lot less harsh, even though this will mean more losses for the banks and hence for taxpayers.

Another indication that the Spanish economy has deep fault lines which no ECB bailout can begin to address.