Podemos Targets Goldman in Spain, EU Insurgents Attack

20 January 2015 – Bloomberg

The anti-austerity party Podemos, leading Spanish polls less than a year before the next election, is targeting Goldman Sachs Group Inc. (GS)’s purchase of social housing in Madrid, saying it’s a predatory type of investment that should be stamped out.

Podemos is highlighting transactions such as Goldman’s 201 million-euro ($234 million) acquisition of rent-protected apartments as it works out policies to reduce inequality in Spain and draw millions of unemployed workers back into the labor force after a seven-year slump.

“They know that at a certain point the protected rents will expire, and when that happens, they will throw the tenants out,” Juan Carlos Monedero, a member of Podemos’s executive committee, said in an interview. “They are enriching people who already have more money than they know what to do with, and in turn they are forcing people to live on the streets.”

Governments across the European periphery are braced for an assault by anti-establishment parties channeling voters’ anger at the budget cuts their official creditors demanded in return for financial support. Greek Prime Minister Antonis Samaras is first up, trailing the main opposition party Syriza ahead of this weekend’s general election. His Spanish counterpart Mariano Rajoy has to call a vote around the end of the year.

Naked Calendars

Podemos has led in most opinion polls since November. The party had the backing of 28.2 percent of voters compared with 19.2 percent for Rajoy’s People’s Party, in a Metroscopia poll of 1,000 people conducted Jan. 7 and 8 for El Pais newspaper. A separate poll for the ABC newspaper published Jan. 18 gave Rajoy 29.3 percent and Podemos 21.1 percent.

Goldman Sachs and its junior partner Azora purchased 3,000 apartments that the Madrid regional government had set aside for low income families in August 2013. Blackstone Group LP (BX), the world’s largest alternative-asset manager, and its partner Magic Real Estate bought a similar portfolio from the city of Madrid in July 2013 for 128.5 million euros.

A group of tenants from the blocks bought by Blackstone created an association to fight the terms of the sale, which saw them lose the chance to buy their homes after ten years, according to Arantxa Mejias, the head of the group. To help finance its activities the association produced a calendar featuring nude pictures of the families living in the buildings.

Goldman’s London-based spokeswoman Fiona Laffan declined to comment when contacted by Bloomberg. Andrew Dowler, a spokesman for Blackstone in London, also declined to comment.

Podemos’s Plans

In economic terms, Goldman and Blackstone’s investments proved prescient. Spain emerged from recession in the third quarter of 2013 and the property market began to pick up a year later. Yet the investors may still not be able to escape the fallout from the financial crisis.

With unemployment at 24 percent, more than double the European Union average, Podemos is luring voters by promising to re-engineer the Spanish economy to give opportunities to those who’ve been marginalized by the crisis. Leader Pablo Iglesias plans to increase public investment and reject the demands for austerity which forced officials to sell off assets such as public housing.

Iglesias will visit Greece this week to support his ally, Syriza leader Alexis Tsipras, in the final days of his general election campaign. Iglesias is aiming to use a Syriza victory in Greece as a stepping stone to help him claim power in Spain.

Should he achieve that, a Podemos government would promote a debate about the ethics of Goldman’s real estate investment.

“I don’t care whether that’s legal,” Monedero said. “We still have to discuss it.”

Original story: Bloomberg (by Esteban Duarte)

Edited by: Carmel Drake

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