"I have a little bar. A drinks bar," says Chadd Ritenbaugh. His bar is called El Catalonia. It's in the port of Marbella, on the Spanish coast.
"Just sun, sand, and sea," he says. "It's just kind of empty at the moment."
Ritenbaugh bought the bar in 2009. Since then, business has gone downhill. He tried, and failed, to sell.
"Nobody's out buying bars right now," he says. "Banks in Spain are not lending a cent — a euro cent."
Chad himself tried and failed to get a bank loan. "Absolutely nothing," he says.
This was happening all over Europe last year. As the European debt crisis gre worse and worse, banks looked nervously at what were supposed to be their safest loans: loans to European governments. If those governments couldn't make good on the loans, the banks would go under.
Governments didn't have money to bail out the banks. Banks didn't have money to bail out the governments. The only place the money could come from was the European Central Bank. But for months, as things got worse and worse, the ECB said no. Specifically, the ECB said:
A. It's not our job to prop up banks.
B. Pumping all this new money into the banks to solve a debt problem is a recipe for inflation.
The European governments got pretty uptight, waiting for help from their central bank. They made some big promises about how they were going to get out of debt.
Finally, right around Christmas eve, the European Central Bank turned on the money faucet. They just told the banks, Hey, if you need a cheap loan, we'll give it to you.
European banks drank that money in. And last week, the ECB doubled down and made a whole second round of loans available to the thirsty European banks. The ECB has loaned $1.7 trillion to the banks through its new lending program.
The money hasn't yet made its way to the little tiny bar on the coast of Spain. The banks have loaned some to European governments, and kept some for themselves.
"I keep hearing the same stories: that nobody can borrow any money," says Rittenbaugh.
But the lending program is still new. The new loans from the ECB money may make their way out into the real economy soon.
STEVE INSKEEP, HOST:
Now, you've heard that European governments have a little debt problem. But right now the banks in Europe have plenty of money. A mere six months ago, people were talking about which banks were going to collapse. Zoe Chace, of NPR's Planet Money team, has the story of how those banks almost sank the European economy until they got a massive infusion of cash.
ZOE CHACE, BYLINE: How much cash? $1.7 trillion. Who's got that kind of money on hand in Europe? Only one place - the European Central Bank. You might remember a couple years ago when the U.S. banks were in trouble, our central bank, the Federal Reserve, poured money into the banking system. Almost a trillion dollars, actually. But that was the height of the financial crisis. The European Central Bank just did this last week. It's a pretty dramatic thing to do. And to figure out why they took such a big step, let's go to the coast of Spain - to a bar in Marbella.
CHAD RITENBAUGH: I have a little bar, a drinks bar, in the Port of Marbella, and just sun, sand and sea.
CHACE: It's just kind of empty at the moment.
RITENBAUGH: It is.
CHACE: Chad Ritenbaugh is American but he lives in coastal Spain. And he owns and runs this bar, El Catalonia. He bought it during tough times, 2009.
RITENBAUGH: The bottom fell out again in 2010, just kept going lower again in 2011.
CHACE: Bad situation getting worse. Chad was like, I got to get out of here. So he decides to sell the bar, but there's a problem.
RITENBAUGH: Nobody's out buying bars right now. And I think in part because banks are just not lending a cent, a euro cent.
CHACE: People kept telling him over and over, I can't get a loan from a Spanish bank. And this made sense to Chad. After all, he'd tried to get a loan too.
RITENBAUGH: Just like 40,000 euros, couldn't lend us anything. We'd say, you know - it's almost comical - well, how about 20? How about 10? No. No. No. How about five? No, absolutely nothing.
CHACE: This was happening all over Europe. European banks have been hoarding their money. Why? Because last year, as the European debt crisis grew worse and worse, banks were looking nervously at what was supposed to be their safest loans, their most popular loans - loans to the government. Those loans on their books, they weren't worth so much anymore. And the banks had made a lot of them, so European banks started worrying about bankruptcy.
Economist Luis Garicano remembers what happened next.
DR. LUIS GARICANO: People said, what about the state? Oh, my goodness, the state is going to have to rescue these banks and these banks are big and bad.
CHACE: The state couldn't help the banks. The banks couldn't help the state. Nobody had any money. Nobody's lending. Everybody's broke. Except for the European Central Bank. But for months, as things got worse and worse, the ECB said no, we can't – A) it's not our job to prop up banks, and B) pumping all this new money into the banks to solve a debt problem, that's a recipe for inflation.
The European governments got pretty uptight, waiting for help from their central bank. They made some big promises about how they were going to get out of debt. Finally, right around Christmas Eve, the European Central Bank turned on the faucet. They actually didn't make a big deal out of it at the time. They just said, hey, if you need a cheap loan, we'll give it to you.
GARICANO: It does solve the problem of how am I going to finance myself tomorrow morning.
CHACE: Luis Garicano says European banks drank that money in. It plugged the holes on their balance sheets. But it wasn't enough. And last week the ECB doubled down. They made a whole second round of loans available to the thirsty European banks.
But it hasn't yet made its way to a little tiny bar on the coast of Spain. The banks have mostly kept it for themselves and for their governments. And our poor bartender? He's stuck.
RITENBAUGH: I keep hearing the same stories, that nobody can borrow any money.
CHACE: But remember, this just happened. The new loans from the ECB money might make their way down into the real economy soon - to the bars in Spain, as well as the banks.
Zoe Chace, NPR News. Transcript provided by NPR, Copyright NPR.