Spain: Thanks for the $125 B, Can I Have $625 B More?

from Via Meadia by Walter Russell Mead:

Spain: Thanks for the $125 B, Can I Have $625 B More?:

Ten short days ago, the $125 Spanish bank rescue plan was being hailed, briefly, by rattled European officials as a breakthrough that would stabilize the eurozone’s fourth largest economy.

Now yields on Spanish 10 year bonds have passed 7 percent, the “magic number” that forced Greece, Ireland and Portugal to seek national bailouts, and the talk is growing that Spain is going to need another, bigger bailout: of the country, not of the banks. 7 percent is a magic number because when heavily indebted countries have to pay that kind of interest on their debt, a doom spiral sets in: the high interests rates make their debts harder to service and raises the ratio of debt to GDP. That higher risk leads investors to demand even higher interest rates, and that makes the debt even less sustainable, driving interest rates even higher.
Repeat until dead.

This is the prospect Spain now faces, and the only way out would be an EU bailout of the Spanish government. From the FT:

A full bailout would cost something close to €500bn, stretch the resources of the EU and the International Monetary Fund, and raise the possibility that Italy would also require assistance and so herald a break-up of the euro.

[...]

The death of individual responsibility leads to the death of governments.