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Spain announces harsh austerity plan

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To some degree there's no choice but to make cuts, but at the same time, such harsh conditions will only drag this out longer and make it far more painful. The tough times in Spain are about to get a lot tougher. The economic problems in Greece are minuscule compared to the potential size of the problem in Spain. The Guardian:

"We are taking extraordinary measures because the situation is extraordinary," the budget minister, Cristóbal Montoro, said before announcing €27bn (£22.5bn) in spending cuts and tax rises.

Markets and fellow eurozone members increasingly fear that Spain – whose economy is twice the size of that of Greece, Ireland and Portugal put together – could be the biggest threat to their future.

"Spain is going to stop being a problem, especially for the Spanish people, but also for the European Union," finance minister Luis de Guindos said as he prepared to explain the austerity measures to concerned eurozone ministers who were meeting in Copenhagen.
This is wishful thinking, at best. The unemployment numbers in Spain are horrendous, the banks are wobbling and the real estate market is not unlike the worst markets in the US. Wishing away a problem and cutting everything is not going to fix it.

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