Krugman says bailing out Spanish banks doesn't change the fundamentals:
[T]he whole story is starting to feel like a comedy routine: yet again the economy slides, unemployment soars, banks get into trouble, governments rush to the rescue — but somehow it’s only the banks that get rescued, not the unemployed.
Just to be clear, Spanish banks did indeed need a bailout. Spain was clearly on the edge of a “doom loop” — a well-understood process in which concern about banks’ solvency forces the banks to sell assets, which drives down the prices of those assets, which makes people even more worried about solvency.
Meanwhile, senior officials are asserting that austerity and internal devaluation really would work if only people truly believed in their necessity.
Put all of this together and you get a picture of a European policy elite always ready to spring into action to defend the banks, but otherwise completely unwilling to admit that its policies are failing the people the economy is supposed to serve.
It's depressing, watching Europe make the same mistakes they made in the early 1930s. It's happening in the US as well, thanks to a craven, almost-criminal effort by the GOP to kill anything that would help our economy before the election. I sincerely hope President Obama becomes FDR after his re-election. The other two possibilities—he stays the same, cautious guy, or Romney gets elected—will mean years more depression in the US.