The crisis has a three-pronged origin. Large companies (Telefonica, Repsol, Abertis...) owe vast amounts of money, largely for ambitious international expansion which in some cases has ended up in South American nationalisations (eg YPF).
Next, Spanish banks had lent in the form of mortgages that in part fuelled the building bubble vast amounts of money which came, as always, from account holders, but at least as much from foreign (mainly European) banks.
Finally, all the public authorities were well used, despite the 1992 Maastricht treaty requirements, to grossly overspend, relying on overseas loans at very low interest rates. All very well until confidence dropped and interest rates soared, eating up a disproportionate share of the budget. Central government reacted selfishly, raising taxes to its own benefit and drastically reducing its funding to regional authorities; and also imposing impossible regional deficit objectives. This has crippled the Catalan government (with flat rate funding, not related to GDP), which has been brought to its financial knees, with a scarcely veiled threat that this will go on till Catalonia drops its plans for independence.
As you say, the social costs are enormous, at a time (chicken or egg?) of widespread social discredit of the political... caste: particularly because of corruption charges (or hints), unfulfilled promises and the apparent inability to lead Spain out of the nose-diving economic crisis.
Only today we read of a single mother with three kids, on a €400 monthly income, with a court eviction order (she hasn't paid the rent since 2010) that the judge has had the decency to keep on hold until the authorities find a solution (which would surely be cheaper that paying an orphanage to take care of her kids). And a number of suicides when the evictors were banging on the door. Ugh!
On the identity/language/culture front, apart from VAT being hiked from 8% to 21% by central government, the tidal wave of the crisis has washed away or paralyzed key Catalan institutions that (largely) relied on Catalan and local government grants such as the Centre Unesco de Catalunya and (we fear) the Hospital de Sant Pau for instance. The only Catalan-owned airline (Spanair) also went bust.
The crisis is also political. Spanish nationalism has intensified its attack on Catalonia's (highly successful) language-in-schools model with a flimsy application of the 'freedom' principle (surely schools are for teaching and should be regarded as black boxes left to the specialists to get on with their job, and with accurate and periodical evaluations of the level of attainment of schools objective in terms of knowledge, skills and values!). The last court injunction says that if just one Spanish-speaking family wants instruction through Spanish for their child, the whole of the rest of the class has to get it as well: an aberration if ever there was one, the confirmation that there are still 2nd class citizens in Catalonia. It is up to each school, according to the (contested) 2009 Catalan Education Act, to decide how much instruction their pupils need throught the medium of the non-default language, to ensure they all achieve the language proficiency requirements laid down by the system, but the court has stampeded over this law like a herd of maddened elephants. To rub salt into the wound, the spokesman for the latest bout of parents is from the Argentine.
22 Apr 2013