I mentioned earlier some of the political situations in the Eurozone preventing some crisis management actions from taking place. They also can prevent things like the sellout of national sovereignty and the “when you’re in a hole, keep digging” austerity approach to fiscal policy that we’ve seen.

An example is the massive protests we’re seeing in Madrid today, in advance of what will likely be another austerity budget by the Spanish government, perhaps a pre-emptive set of conditions prior to an official bailout request. The people only suffer from continued austerity at a time of 25% unemployment. So they filled the Plaza de Espana and elsewhere to call for changes:

They are calling for the country’s parliament to be dissolved and fresh elections to be held, claiming the government’s austerity measures show the ruling Popular Party misled voters to get elected last November.

On Tuesday, police barricaded access to the Congress of Deputies, where lawmakers are due to unveil this week a new series of cost-cutting moves.

Police beat protesters near the Parliament in central Madrid, firing rubber bullets and charging the crowds. At least five injuries were reported.

The Spanish protesters are not an off-shoot of the Occupy movement, but a precursor. The “indignados” started their protest movement back in May 2011, and they have sustained it amidst a terrible economy and a cascade of Spanish bank failures. The movement, along with the economic crisis, always simmered beneath the surface when I visited Spain this spring.

The protesters’ time is short, as on Thursday, the Spanish government plans to introduce yet another austerity program.

With this year’s budget deficit target looking untenable, the conservative government is now looking at such things as cuts in inflation-linked pensions, taxes on stock transactions, “green taxes” on emissions or eliminating tax breaks.

The 2013 budget is the second one conservative Prime Minister Mariano Rajoy has had to pass since he took office in December. Spain must persuade its European partners that it can cut the budget shortfall by more than 60 billion euros by 2014.

Rajoy has already passed spending cuts and tax hikes worth slightly more than that over the next two years, but half-year figures show the 2012 deficit target slipping from view as tax income forecasts will not be hit due to economic contraction.

He said earlier this month the 2013 budget would cut spending further in all areas of government apart from pensions and borrowing costs.

Tax-based austerity, especially in the near-depression circumstances in Spain, is still austerity. There are harmful versions and more helpful versions of it. But the best plan would be for the government to put people back to work, and they’re fixing to do the opposite.

This 2013 budget, then, will be a nightmare. And it’s unclear whether the protest movement will have the leverage to stop it. But anything is possible; Portugal did roll back some of their austerity measures after mass demonstrations.