The economy contracted in mainly to the severity of the

The economy contracted 3.8% in 2009, mainly to the severity of the housing sector problem combined with the financial crisis contagion, and deteriorated the macroeconomic key figures. The loss revenue; according to data the public revenue to gdp ratio was reduced 6.7% from the level of 2007, the 6.7% increase in unemployment, real estate sector prices drop and sudden stop in productive sector (Banco de España, 2010, pp. 21-36). The bank of Spain bailout, a regional lender Caja Castilla-La Mancha, the government created a bailout fund for banks with a capital of 99 billion euros and forces financial restructuring and merges. The interest rate paid for the bonds decreased due to the search for safety of the us as an epicenter of the financial crisis and a drop of the interest rates of the main central banks to counter the crisis. Primary balance deficit increased 144% while external debt 6 The paper uses the Maastricht definition of government balance 7 The paper uses the Maastricht definition of gross government debt rose more than 34%. The debt to gdp ratio exceeded 54% and the primary balance to the gdp was 11.1%. The economy contracted 0.2% in 2010. The financial crisis generated more tightening in the financial system that Tasquinimod affected the lending standards and the perception of risk of the Spanish banking system, leading to increase in interest rates and bond yields spread against the German benchmark. Doubts about the commitment to tackle structural problems, higher unemployment rates, labor market dysfunctionalities, deteriorating public finances and weakness of the European institutional framework raised doubts about the course of public spending. (Banco de España, 2011, pp. 23-42). The turmoil in the euro area sovereign debt markets lead to substantial increase in the prices of the European debt bond yields, Spanish among them. The high tension of the Greek (110 billion euros) and Irish (85 billion euros) financial support packages generated a contagion effect upon the risk of the Spanish economy and its debt bonds were down grade from aaa by Moody\'s and Fitch and Standard and Poor\'s. The country adopted a structural adjustment agenda, which implied among several issues a labor reform, Royal decree-law 10/2010. The debt to gdp ratio exceeded 61.7% and the primary balance to the gdp was -9.6%. The negative international environment in 2011 in the Euro area undermined considerably Spanish growth, and distal tubule renewed a dip into recession. The European debt crisis continued to unfold with a bailout of Portugal (78 billion euros) and a second bailout in Greece (155 billion euros), this affected the risk of Spanish bond yields, increasing the interest paid up to that moment to record levels the interest paid up to that moment. This increased cost of lending generated serious economic distress to the economy forcing the European Central Bank had to buy bonds to cut down borrowing cost and prevent the contagion of the debt crisis (Banco de España, 2012, pp. 13-33). The economic growth was 0.05%. The main export destination of the Spanish economy is the euro area countries which most are also undergoing economic adjustment, repressing consumption. Additionally the sluggish domestic demand has been limited by the negative financial outlook, affected by the repercussion of the sovereign debt crisis and the restructuring of the Spanish financial system, the an increase of job destruction, further collapse of real estate sector and spillover effects of government austerity plans, the debt to gdp ratio exceeded 70.5% and the primary balance to the gdp was -9.6%. The among the austerity agenda the parliament decided to increase the age of retirement, a constitutional amendment forcing government to keep balance budget and early general elections due to political tensions. In 2012 the Greek government together with Euro area countries and the imf decided to conduct a debt swap of Greek government bonds, exposing that euro area countries government bonds were not risk free. Cyprus had economic problems due to its banking sector after considerable losses from investment in Greek bonds and had to request the euro area countries for a bailout of 10 billion euros. After this event investors again began to request higher risk premiums for euro area countries government bonds (Gruppe & Lange, 2013 (in Press), pp. 2-3). The bond rates of Spanish bond rose considerable amid fears of government bailout of its weak financial institutions that could lead to another country bailout (Banco de España, 2013).