Spain Is a Ticking Time Bomb: Pro

As investors step optimistically into the second quarter, one expert says a time bomb - in the form of Spain - is ticking away under the global economy.

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“Spain will be the next shoe to drop. They've been slowly accumulating debt when unemployment rates are exceeding 20 percent. Those are economic disaster warning bells,” Tony Sanders, a Senior Scholar with the Mercatus Center at George Mason University told CNBC in Singapore.

Spain said in its budget presentation Tuesday that its debt levels were going to jump in 2012 to their highest levels in 22 years.

Sanders thinks a repeat of 2011 is about to unfold. Last year, economic data and markets were just starting to improve when theGreek debt crisisexploded and sent investors scurrying for the exits, he said.

“The LTRO(Long Term Refinancing Operations) is just a wish and a hope. How will flooding Spain’s banks with liquidity salvage a 23 percent unemployment rate? It won't, it's just ticking away.”

Sanders says the current 740 billion euro ($976 billion) firewall won’t be large enough to stop contagion from a Spanish default.

“It’s just not big enough. They have massive entitlements and huge amounts of debt to fund. I feel sorry for Super Mario (ECB President Mario Draghi). He is going to have to be super because I just don't think he has enough bullets in his gun to pull this off,” Sanders said.

On WednesdaySpain sold 2.6 billion euros($3.4 billion) of government bonds at yields higher than at previous sales. The 2020 bond on offer was sold at an average yield of 5.34 percent