The FT focuses on Spain again

The Financial Times ("Spain, not Greece, may be the biggest eurozone threat", insight piece by Charles Dumas) warns about a possibly disastrous economic future for Spain (again). It stresses the importance of non-financial sector debts and compares the country to Japan in the late 1990s and names the measures the Japanese took to get out of that situation - which are out of the question for Spain as e.g. it cannot devalue its currency (the Euro) nor run large budget deficits. The main points are cited below, the full article is here.

But Spain’s current situation is in several respects far worse than Japan’s back then. First, Japan had a currency, which devalued in real terms by 20 per cent over the six years to 2002, aiding adjustment. Spain is fixed in the euro.
Second, having a currency, Japan also had a monetary policy – the famous “ZIRP”, zero-interest-rate-policy. Spain’s monetary conditions are set by the ECB in Frankfurt, with recent tightening that could hardly be more unsuitable for Spain.
Third, Japan had an independent fiscal policy, and ran large budget deficits to offset private-sector debt repayment via financial surpluses. Spain is under orders from its eurozone “partners” to slash its deficits, “no matter how politically painful” to quote Wolfgang Schäuble, German finance minister, in Financial Times columns recently.
Fourth, Japan had (and has) flexible wages – downward in nominal terms as well as upward. In the six years from 1997, as recession hit, average nominal weekly wages fell by 1¼ per cent a year – and they have continued to fall (on average) since then, though more slowly. Spain, by contrast, has a consistent inflation record and in many cases index-linked wage increases. Lastly, Japan was handling its problems in a broadly expansionary world economy, which Spain regrettably cannot hope for.
The chances are high of a Spanish asset price slide and banking crisis, with stagnation (at best) or depression, if it sticks in the euro.