Spain turned to complete socialism in the middle of the decade, you might recall, after being hit with train bombs by Islamo-Fascists right before the election of 2004. The socialists claimed that Spain was at risk because of its support for the War On Terror, and that if Spain withdrew and started "dealing peacefully" with the radicals, both Islamic and Basque separatists, and understood their complaints, Spain would become immune to terrorism. So Spaniards elected a socialist government.
Except that the terror attacks did not stop. Basque fascists, one day after socialist leader Zapatero proclaimed that his dialogue with them was making progress, set off a huge car bomb at the Madrid Airport. Al-Qaeda in Algeria, after claiming responsibility for attacks in Algeria in 2007 which killed 25 people, said that Spain was next, because it was Islamic territory, and they would not rest until their "beloved al-Andalus" (i.e. Spain) was under Islamic control.
And economics! Knowing that socialists are appeasers, unions began increasingly to rattle Spain: in the first quarter alone of 2008 there were over 300 strikes and walk-outs across the economy, with the complaint from workers that they were not being protected from free-market forces. They all wanted guarantees and hand-outs, which Zapatero promised and brought him a second term.
Because of increased government spending and tax hikes, inflation and unemployment began rising almost immediately. Gas, food, energy, housing etc. have all risen significantly. 100,000 Spaniards defaulted on mortgages in 2008. Zapatero in a Clintonian moment, said that it was "opinionable" as to whether the Spanish economy was in trouble. "It all depends on what you mean by 'crisis'." And former socialist labor minister Jesus Caldera, in a NObama moment, blamed George W. Bush for their ills with his "conservative thinking." (If you can read Spanish, the article is below.)
With nearly 15% unemployment the Spanish social network is almost bankrupt, and people are being cut from the rolls: immigrants who used to be part of the safety net are being asked to go home. The number of small businesses, especially in construction, entering bankruptcy quadrupled at the end of 2008.
Because they are tied to the Euro, Spain's socialists are perhaps not as out-of-control as they otherwise would be in monetary policy. The Spanish are not to be fooled again perhaps, despite the perversities of Orwellian language used by the government to make green equal red and vice versa. The polls show sinking popularity for the Socialists: but who knows?
We at least can use their sufferings as a warning! I compiled this from various Reuters reports and articles written by analysts in Spain for The Brussels Journal.