The consequences of a default of Spain would be so catastrophic for the euro currency and for many european banks that european authorities will seriously consider whether they can avoid it and at what cost. Well, it can be avoided at a huge cost, but for the time being this is cheaper than repairing the damage of the default.
Right now, Spain and Italy are near their lowest marks in markets confidence. The psychological impact is severe and the markets begin to think that we are headed to the abyss. But there were other confidence crisis like this before and the worst didn't last. They were panic spikes on a cloudy baseline. The "baseline" is gloomy at its best, I don't pretend the opposite. In the past, the ECB, EFSF or other mechanisms reacted and restored the statu quo. Which is not a rosy one, just enough to survive another quarter till the final recovery shows up its first signs.
The Public Treasury of Spain has refinancing needs of 150 to 200 billion euros in 2012 (I think that regions debt is included in the figures, but I'm not sure), and some may still be borrowed from foreing investors; perhaps not today, but after this spike passes. A huge sum, but still much lower than the cost of cleaning the rubble. Ms Merkel could find hard to explain that the taxpayers' money is to be used to help lavish EU members, but if the goal is saving the euro, their own banks and even Germans' whealth, she'll get support.