Germans are not exactly famous for their levity, let alone that of their banks. But according to the Deutsche Bank – the country’s foremost financial institution –, Spain was "the happy variety of capitalism" in 2007, "one of the most impressive success stories of the past few decades”. That was, in a nutshell, the prevailing image of the Spanish brand (if such a concept exists) just a few months before it dropped into the recessionary spiral.

A recession is a rather strange way of putting things in their place, and it gives rise to huge distortions. There is a photograph that sums up how the Spanish economy is currently perceived in the international scene: that of president Zapatero at the Davos Forum, seated between the prime minister of Greece (the epicentre of the European fiscal crisis) and the president of Latvia (the European country that has suffered most from the crisis).

Spanish economic problems acute and manifold

In Spain, the past three years have been a way to wake up from the dream, from the mirage created by 15 long years of prosperity built on mountains of public ­ and above all private – debt, on a property bubble, on a golden age that is now coming to an end.

On the foreign front, the current slump has sparked exaggerations like the hyperbole of the Deutsche Bank ­– and now its mirror image: "Spain is the sick man of Europe,” Desmond Lachman from the neo-conservative think tank American Enterprise Institute lets fly. "Though admittedly not as sick as Greece,” he adds as if to dilute the dose of venom.

The budget deficit, national debt, consumption collapse, unemployment, bursting of the property bubble, bank troubles, plummeting confidence, stiffening competition: the problems with the Spanish economy are acute and manifold. And yet in and of themselves they do not suffice to explain the ferocity of the attack from the markets. Other countries are faring no better, or even worse (probably Ireland and perhaps Italy, too), and they haven’t been give such a bashing.

We’re not as rich as we thought

The thing is, economics is an eminently social science: the story it tells is as important as the figures. And Spain is clearly one of the bad guys in the story, which explains the tenor of this latest chapter of the crisis. The reason is precisely that image of a brand on the wane, the market’s bad feeling about Spain, the spreading groundswell of distrust, all of which is discolouring the Spanish brand of the crisis.

"When a Nigerian taxi driver in Washington brings up the euro, and Greece, and immediately asks if Spain can stand the pressure, things are not going well,” says Ángel Cabrera, head of Thunderbird business school in Arizona. "The Spanish brand is afflicted because the economy put itself in the eye of the hurricane, by contagion from the Greek crisis. The Spanish miracle everyone was talking about a few years back has vanished.

And we should welcome this wake-up call because we’re not as rich as we thought, and as a nation we can’t afford things that were the order of the day till literally two days ago, when the government, after denying the obvious for so long, finally passed the austerity plan. That’s life,” explains Cabrera. "That being said, the vicious attacks are also unfair: what we’ve accomplished over the past few years isn’t going to just disappear overnight. The achievements are there and now’s the time to limelight them,” he advises.

Europe has mismanaged crisis

David Humphrey, an economics professor in Florida, scoffs at the clichés about Spain being the sick man of Europe, the mounting murmurs about the “Spanish flu”. "Though the economy is in for a long period of stagnation, plus the fiscal crisis and a possible banking crisis,” sums up this ex-chief economist for the US Federal Reserve. By the way, Humphrey often spends summers in Spain: "This business of having two houses, two cars and two kids per family wasn’t normal either.”

To avert a credit catastrophe, the US and UK ended up nationalising banks, and several European countries injected billions into saving the ailing sector: Spain only buoyed up two of its banks. What’s more, national debt amounts to about 200% of GDP in Japan and about 100% in various eurozone countries: but it doesn’t even come to 60% in Spain, whose economy shrank less than the big countries’.

Nor did Spanish exports lose market share during this crisis. To be sure, there are telltale signs enough that the crisis is serious, that reforms are needed: “The crisis has been mismanaged: but the same can be said throughout Europe. In the bumper years, Spain’s image was better than it should have been, and now we’re swinging to the other extreme. Of course it’s always, always like that,” concludes economist José Luis Alzola.