New Austerity Plan In Spain Will Not Fix Its Problems

Spain is in  very difficult situation in which few good choices are available to government.  The government has decided to go forward with austerity measures that will make things worse.  Unemployment will increase, but it won't make Spain more competitive so that it can export its way out of trouble.  It won't solve Spain's fiscal problems either.  Either the Spanish government has a better understanding of the economics than Paul Krugman, or the Spanish government believes that has no good alternative as long it needs external support to save its banking system.  Its also possible that the government believes that it can control the political unrest, and benefit politically by justifying a more authoritative regime change in Spain.