Spanish Prime Minister Mariano Rajoy has spent much of thepolitical capital he won seven months ago in the biggest landslidein 30 years, floundering against a crisis that risks making Spainthe first $1 trillion economy to need a sovereign bailout,investors and analysts say.

Rajoy, singled out by leaders at the Group of 20 summit, hasbeen taunted by opposition lawmakers and commentators as borrowingcosts soared to a euro-era record even after Spain's banks receiveda 100 billion-euro ($127 billion) lifeline. Rajoy called the rescuea victory that solved lenders' problems.

“He clearly doesn't get it,” said Gary Jenkins, founder ofSwordfish Research Ltd. near London, who has tracked bond marketsfor more than 15 years. “Spain needs someone who can come in andgrasp the seriousness of the situation and react to that, not justpretend everything's okay.”