The macroeconomic outlook continues to deteriorate as unemployment rises. Angry citizens are protesting austerity in the streets.
At the same time, Spain has just unveiled its 2013 austerity budget, but the overly-optimistic macroeconomic assumptions underlying the plan foreshadow missed deficit targets in the coming quarters, which will likely force a new round of austerity measures, further worsening the economic contraction.
Meanwhile, the Spanish region of Catalonia is threatening to secede.
Technically, the "worst-case scenario" for Spain would be something along the lines of a 100 percent decline in GDP and 100 percent unemployment. No one is calling for that.
Presented here are all of the things that could go wrong, though. The recent work of Citi economists and strategists is heavily cited because they seem to be consistently more bearish on the Spanish situation than other shops.