Pretty good background here: http://www.bbc.co.uk/news/magazine-13626046

TL;DR Jersey Shore (sometimes minus the tan).

Politically-Okay discrimination against a cultural group not ones own.

I would say that the OP is one of the very serious reasons for the problems in Spain : that he considers 'a fucking cani' does not deserve 1200 euro's a month.

Socially inbred discrimination against other workers/classes in ones society are a key cause of economic disaster. Since there are whole classes of society who don't 'deserve' what they get all over the place ..

As hilariously parodied by an amateur filmmaker. http://www.youtube.com/watch?v=BNaCHXrnr9U

Council House[1] And Violent

This is not the original etymology (see other replies) but I have heard it explained thus many times.

[1] Council House - A UK property owned by 'the council', a regional administrative and legislative body, and let to the disadvantaged.

A ne'er-do-well. In a tracksuit.

Ali G