Europe’s crisis spotlight, swifts to the west.

As Greece prepares for a June 17 election that may determine whether it exits the euro, the attention has shifted to Spain, where the problems are different—and much larger.

Greece’s troubles stem from excessive government borrowing; Spain suffers from a property bust and its banks remain crippled by an estimated €184 billion ($230 billion) in troubled real estate assets. The government is struggling to devise a rescue plan as the country grapples with a deepening recession and 24 percent unemployment.

Prime Minister Mariano Rajoy insists his country doesn’t need a bailout, though investors say otherwise.

The cost of insuring Spanish sovereign debt rose to a record high on May 30, and yields on Spain’s 10-year bonds climbed close to the 7 percent level that led Greece, Ireland, and Portugal to seek bailouts from the European Union and the International Monetary Fund.

Considering that Spain’s economy is almost twice as big as those of Greece, Portugal, and Ireland combined, the country poses the biggest test for European authorities yet.

“It’s getting increasingly ugly,” says Georg Grodzki, who helps oversee $515 billion at Legal & General Investment Management in London.

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