All exactly true, but for two teensy-weensy details:
First, Spain did a good job at paying down *sovereign* (ie, public) debt through the last decade. They took fire and tongs to public employee payrolls and pensions/retirement schemes, raising ages of eligibility, etc. They did a good job there, better than most in Europe.
Sadly, their economy (like ours) went on a housing bubble explosion. They have a housing bubble that makes ours look like a popcorn fart in a hurricane. So their banks have huge “private sector” debt.
Who holds Spain’s debt?
Germany, France, UK and US, in order of impact.
Right now, Spain is in a position to sink the banks of Germany, France (and perhaps a couple in Belgium), cause the UK pain and ruffle some feathers here in the US.
Take down the German banks and you take down the ECB and the Euro. The French situation is looking more dire by the day, only the Germans stand between the current situation and chaos. Every day that goes by, the Frogs are pleading, demanding, begging, crying, stamping their feet and getting seriously silly as they want the Germans to inflate the currency (the Euro) to print money the way we are to get these spendthrifts out of hock.
The Germans want nothing to do with this idea. They remember the last time they had rampant inflation.
The French should, too.
Spain went bonkers on housing and green energy.
They are holders of Greek debt.
Their debt is held by the ECB and the IMF (the US taxpayer)
Now the Spanish govt is nationalizing the banks to grab up cash to pay off the debts. Problem is that there is not enough money to pay it off.
So, ask for more debt.
Like the commercial years ago where a guy explains why he buys cocaine, so he can work more hours, so he can make more money, so he can buy more cocaine, so he can work more hours, so he can make more money, so he can buy more cocaine......
Eventually, the music will stop and the piper will have to be paid. It will be us that gets stuck with the bill.