Bailout in Spain Leaves Taxpayers Liable for the Cost Angel Navarrete/Bloomberg News Critics are noting that any upside from the bailout will go to the banks and their investors. The potential downside will be the Spanish people's to bear. MADRID - After clinching a $125 billion bailout for Spain's banks, Prime Minister Mariano Rajoy flew to Poland on Sunday for the Spanish team's soccer match, declaring "this matter is now resolved." Not so fast, prime minister. On Tuesday, Spain's long-term borrowing costs soared to their highest level since the country joined the euro zone. Investors have apparently concluded that the rescue is potentially a much better deal for the banks and their shareholders than for the government, its taxpayers and bondholders. Many details of the banking bailout remain to be resolved - including which of Europe's rescue funds will supply the money. The one thing that is clear is that even though the money will be funneled to the banks, the government in Madrid will ultimately be responsible for guaranteeing that $125 billion, adding to the Spanish government's already rising debt load. That fact, more than any other, probably explains why there was heavy selling of Spanish government bonds on Monday and Tuesday. The yield on Spain's 10-year bonds - an indicator of the government's borrowing costs and the risk of holding that debt - rose Tuesday to as high as 6.8 percent. That is approaching the level that led to bailouts for Ireland, Portugal and Greece. With its banking industry in trouble, Spain probably would eventually have had no choice but to seek a rescue. And by not having to cede autonomy over its government budgets or spending, Madrid attained a much better deal than other governments have with their bailouts. And yet, critics are noting that any upside from the arrangement will go to the banks and their investors. "Unfortunately Spain didn't manage to reach one of its main goals in the negotiations, which was to have Europe bear part of the risk of rescuing the financial sector, without letting it fall instead directly onto the shoulders of the Spanish taxpayer," said Luis Garicano, a Spanish economist who teaches at the London of School Economics. Ultimately, those who lent to our financial system were the banks and insurance companies of Northern Europe, which should bear the consequences of these decisions. The full bailout loan would add 10 percentage points to Spain's debt, raising it to about 90 percent of gross domestic product this year. And Fitch, the credit rating agency that downgraded Spain's government debt nearly to junk status last week, warned Tuesday, that even if Spain used only 60 billion euros of the bailout loan, that would put Spain's debt "on a trajectory to peak at 95 percent of G.D.P. in 2015." As recently as April, Luis de Guindos, the economy minister, had forecast that debt would rise to 78 percent of G.D.P. this year. On Tuesday, despite the bailout plan, Fitch downgraded the credit ratings of 18 Spanish banks. That included Bankia, the troubled mortgage lender the government nationalized in early May. Some analysts are questioning the rush by European finance ministers to push for Spain to accept a bailout before Greek elections on Sunday. Those elections could create deeper turmoil for the euro zone. "The Europeans wanted to put a firewall between Greece and Spain, but they've accelerated things in a way that doesn't at all give confidence to the markets," said Xavier Sala-í-Martin, an economics professor at Columbia University. Instead, he said, the deal "leaves the impression that everything was just improvised rather than planned properly." Until last weekend, in fact, Mr. Rajoy's government had resisted formally requesting a rescue package, saying it wanted first to establish exactly how much money was needed to keep its troubled banks afloat. Madrid had already grossly underestimated the problems at Bankia when it seized the mortgage lender last month after giving it a 4.5 billion euro cash infusion. Less than two weeks later, the bank's overseers said it would need an additional 19 billion euros ($23.88 billion) of new capital - a declaration that unsettled the markets and threatened to turn a steady outflow of investor money from Spanish banks into a torrent.