The new Spanish government has announced that it plans to flaunt Eurozone rules regarding it's fiscal deficit. The 4.4 % promised by the previous government in its deal last year with the European Commission has been tossed aside by the new Spanish Prime Minister Mariano Rajoy. So much for fiscal austerity. Spain now has the worst of both worlds -- expanding debt and no real spending curbs. The Spanish economy has the highest unemployment rate in Europe, pushing it's way toward 25 percent. Not surprisingly, the new Spanish government cannot survive politically if it fully implements the austerity program that it agreed to just twelve months ago.
This will be the continuing tale. European countries will not live up to the austerity agreements that they forge with the ECB and the European Commission. Merkel and Sarcozy are wasting a lot of people's time with this. It is not going to happen.
Meanwhile, interest rates on Spanish debt surged upward. The beat goes on. Sooner or later the Eurozone "solutions" will collapse in tatters and reality will set in. The sooner the better.