The only consolation I can offer you is that the absolute sums seem small in comparison to the size of the Spanish economy and a .5% reduction in GDP is tiny compared to the 9% of GDP equivalent which has been taken out of the Irish economy by the Irish Government here (and with the EU Commission threatening that more will be needed).  Even the Caja bail-out is tiny by Irish standards with a small business bank like Anglo-Irish bank likely to cost taxpayers a cool 30 Billion for no particular public policy reason.

Given my impression that Zapatero is generally relatively progressive, my (most hopeful) conclusion would be that he thinks that a small symbolic retrenchment now will head of the need for a more dramatic retrenchment later even if at the cost of conceding some ground to neo-liberal shock doctrine ideology.   The problem is that one bite rarely satisfies the blood suckers, and once you give them the taste of blood they keep coming back for more.

So it becomes a question of where does Zapatero think he is going to be able to draw the line.  If this is it, and there is no further retrenchment/bail-out, then Spain could be getting off very lightly indeed.  If the Eurozone as a whole can reverse this momentum through some variant of the Merkel Market Mayhem Mitigation Measures we could even see the EU leading the process of Global financial reform, although I don't see how this can be done without a Tobin Tax, and that isn't even included in Obama's signature Wall Street Reform and Consumer Protection Act of 2009

Being very optimistic for a moment, perhaps Zapatero can use this relatively minimal fiscal retrenchment to pivot onto some serious market reform measures...

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