Pawnbrokers poised for business in Spain

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LISA MULLINS: I'm Lisa Mullins and this is The World. The European Union is predicting unemployment is going to rise well above the 7.1 percent registered in the last quarter of 2008. One sign of how much it could rise might be in Spain. Spain now has more than 13 percent of its workforce without jobs and without income. And increasingly desperate for money, waiting in the wings are gold buyers and pawnbrokers. The World's Gerry Hadden explains from Barcelona.

GERRY HADDEN: Early on a recent morning a young woman and her mother emerged from a nondescript building downtown. It has no windows, no showcase overflowing with hawked goods. Unless you asked you wouldn't know it's a pawn shop. The young woman who gives her name only as Claire says they came here out of desperation.

CLAIRE: We had a little shop and things went wrong, so we needed the money. We had, you know, this necklace and two other things and we brought it all here.

HADDEN: Claire's mother says the money they got wasn't enough to save their clothing store so they closed it. She says she only hawked her jewelry to help her four employees.

MOTHER: Just to pay people.

CLAIRE: Yeah, just to pay.

MOTHER: Because I don't want to leave people without getting paid.

HADDEN: Your employees?


HADDEN: Some 300,000 Spaniards now have lines of credit at pawnshops. The stores have an evocative name. They're called "Mountains of Pity." The name comes from Italy where the first Mountain of Pity was started by Franciscan monks in the 17th Century. The mountain refers to the high piles of goods the monks collected for and from the poor. In Spain the Mountains of Pity are overseen by the Association of Spanish Savings Banks. There are only 21 of them in the whole country and their business is up by 20 percent from last year. Javier Ugada, their spokesman, explains why. He says it's evident that families are in trouble given the economic crisis. He adds that immigrants from Latin America and Africa now account for a quarter of business, because they're familiar with these operations in their countries of origin. Those immigrants have been hit hardest by Spain's economic slump. Many work in construction. That sector has all but collapsed, but Ugada says the Mountains of Pity are also receiving more and more middle class families like Claire and her mom.
And those families are not just turning to pawnshops for quick cash. Gold buyers say they're also enjoying a booming year. Barcelona has dozens of storefronts where you can sell your precious metals. At one such office a worker named Niko sits in a tiny booth behind bullet-proof glass. He says his business has doubled in recent months. He says, "People are tight on cash, so I'm making money. Someone has to." "If we had any more business," he adds, "we'd need to have our own money mint to be able to buy all the gold." Niko laughs, but he's getting at a serious problem. Down the street at another gold-buying store, owner Armando Alvaro says he too has more and more gold coming in, but less and less going out. He says, "Eighty percent of what we buy we used to melt down then sell to jewelry makers. That business has plummeted, it's basically gone; jewelry makers just aren't buying. And if we can't resell the precious metals our money is going to run out." Alvaro is trying to make up for losses by going into retail himself. The front window of his shop is now filled with many of the necklaces and earrings he's bought, but he concedes he lacks expertise in selling to the public. One potential shopper who wouldn't give his name agrees. He says, "They want to sell me something, so I came to find out what the price is. They're asking for $1,200, but I think it's worth a third of that." With that he walks off, nothing bought, nothing sold. For The World, I'm Gerry Hadden in Barcelona.