Analysts have warned-if the events in Greece and Italy had brought about a mild tremor in the markets, the situation in Spain (if and when it bursts) will bring about an earthquake of major proportion with repercussions worldwide. Spain has come to the forefront of the global markets agenda this week as yields on its debt soared. The situation (if it’s to be believed) is more worrisome than what happened in Greece and Italy. The fourth largest economy in the euro-zone had fallen as a mere spectator while Italy and Greece played the role of protagonists in this never-ending story of chaos and confusion. Now, concerns are rife about the country’s banking sector, its sovereign debt, high unemployment and stagnant GDP growth and the ensuing social unrest.

Here are some statistics which exhibits a worrying sign. The People’s Party, led by Mariano Rajoy, is predicted to win an overall majority in next week’s elections, defeating the incumbent Spanish Socialists Worker’s Party (PSOE). The prospects of a government with a strong agenda should in theory reassure markets. But opposing the theory, the yields on Spanish 10-year bonds hit 6.38%, this week, which is also the highest level this year. Spain’s budget deficit is also higher than the 6% of GDP target for 2011, hovering around 9.2%. Reducing the deficit will be a long and grim task for Spain keeping in mind that the Spanish people are already suffering from property declines and youth unemployment at close to 50%!

The banking sector has not recovered from financing the initial property boom, and the fallout from the ensuing busts. To add to the woes, there are rumors circulating that its biggest banks may have to be recapitalized. Growth in the third quarter stalled, as demand for Spanish exports slowed and domestic demand continued to fade. Looming over the political and economical picture is the danger of the social unrest. The Occupy movement currently hitting headlines around the world has its roots in the Indignados movement in Spain, which has occupied squares in cities around Spain. This brewing social unrest will downgrade the already sorry state of affairs in the Spanish economy.

In conclusion, my mother recently wanted to wish her Spanish friend Happy Birthday in their mother tongue. ‘Feliz Cumpleanos’ was the answer to the query from whatever little I learned in my Spanish class. But what struck me at the end was-with the commotion and chaos in Madrid – will she be able to celebrate her birthday with a smile on her face or not?