Spain’s southern shoreline, the Costa del Sol, has long been a favorite on Europe's tourism map.  But alongside the beach bars and nightclubs are row after row of half-built, abandoned apartment blocks.

This is the center of a building boom that burst spectacularly with the global financial crisis.  Across Spain, banks gave billions of dollars to property developers trying to cash in.  They are left with huge debts.

The government is already nationalizing the ailing lender, Bankia, at an estimated cost of more than $25 billion.

Tobias Blattner is chief of economic research at Daiwa Capital Markets:

“Bankia is really just the tip of the iceberg, after all, because we know that they still have huge, massively bad loans on their balance sheets," said Blattner. "So I think they are in a very critical stage.  I think what we have seen is the approach that the Spanish government has taken so far was, in a way, not enough to convince the investors that Spanish banks are safe.”

Spain’s economy minister, Luis de Guindos, denied reports his country is seeking international support for its banks.

He stressed to reporters there was not a single question about an eventual rescue.

Spain wants to avoid following the path of countries like Greece and Portugal in tapping the European Union bailout mechanism, says Fidel Peter Helmer, a trader with Hauck and Aufhaeuser Private Bank.

Helmer says it would mean that Spain's sovereign rating would be further downgraded.  He says they want to avoid that because above all, the dilapidated banks are to blame for the misery.

The European Central Bank injected $660 billion worth of liquidity into the continent’s banking system in February.  That medicine appears to be wearing off.  Wednesday, six German banks had their credit rating downgraded by Moody’s because of fears of their exposure to bad debt.

Meanwhile, the European Commission is unveiling plans to avoid taxpayer-funded bailouts in the future.

Michel Barnier is commissioner for internal markets:

Barnier says in the banking sector, the commission wants more surveillance, more prevention and more caution.  He says it does not want taxpayers to pay any longer.

Those proposals would not come into law until 2014 at the earliest, and analysts say they do little to put out the fires raging in Europe’s banking system.