The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By Marc Chandler NEW YORK ( BBH FX Strategy) -- Most market participants are more concerned about Italy's debt burden than Spain's. In August 2011 the price of Italy's 5-year CDS surpassed Spain's. The rating agencies agree and all three of the main agencies give Spain a higher credit rating than Italy. There there are several reasons why Spain may ultimately be more worrisome than Italy. Spain, unlike Italy, has a housing and real estate bubble. The full magnitude of the cost of this is still unclear. Investors and policy makers have a greater sense of Italy's financial burdens than Spain's. In the middle of December, for example, the Bank of Spain indicated that bad loans in the Spanish banking system were 7.4% of all loans. This is a 17-year high and is still rising. Property price and house prices do not appear to have bottomed and the deterioration of the economy warns of the downside risks. The government fund for bank restructuring (FROB) has already injected 30 billion euros into the banks. The EBA says Spanish banks need to raise another 26 billion euros in capital in the first half of 2012. Spain's new economics minister has indicated that Spanish banks may put aside another 50 billion euros (about 4% of GDP) aside for provisions for bad property loans. Investors' focus has been on the challenges that Italy's largest banks face in raising capital. They have yet to turn the attention to Spanish banks capital needs. In the fourth quarter of 2011, the largest Spanish banks indicated they could meet a could part of the EBA's identified needs by simply adjusting their risk asset models. The linkages between the private sector (banks) and public sector (sovereign) are a subject of great interest, as Ireland's experience, among others, has shown. At the very end of last year, the new government in Spain revealed that the 2011 budget shortfall would be 8% (and an official suggest maybe even a bit more)of GDP rather than the 6% target of the prior government and the EC forecast of 6.6%. The target for 2012 is 4.4%.