20/05/2012 18:28 BST | Updated 20/07/2012 06:12 BST

Spain's Year of Miracles

For Spanish and European politicians therefore, 1992 was a year or promise and achievement in which things really looked as if they could only get better. Of course, there were shadows hovering over this bright panorama - to those who wanted to look.

For the last 10 days I've been leading walking groups around the fabulously beautiful mountains of northern Majorca. This is only my second visit to the island since I came here in 1992, when I was still living in Barcelona.

For Spain - and Europe, 1992 was a year in which the 'end of history' narratives that followed the end of the Cold War were at their peak. It was a year in which the implosion of Soviet power was accompanied by the belief that there were no longer any obstacles to the free movement of capital across a 'borderless world', in which the signing of the Maastricht Treaty and the reunification of Germany seemed to herald the advent of a new European superpower, with democracy, human rights and free markets as its defining components.

It was also a year in which Spain received an unusual level of media attention that confirmed its transformation from dictatorship to democracy and its full reincorporation into the European cultural and political mainstream.

This was mainly due to some high-profile events such as the Barcelona Olympic Games - a huge success for Spain and particularly for Catalonia - and the Seville Expo. In addition 1992 was the quincentennial of Columbus's 'discovery' of the Americas, an event which lent itself easily to the prevailing triumphalism of the political and financial elites that were shaping post-Cold War Europe.

In that miraculous year pageantry generally took precedence over historical honesty - especially in connection to the traumatic consequences of what was discreetly referred to as Columbus' 'encounter' for the people he 'discovered'.

Genocide, massacres, the violent rapacity of the conquistadors, the slave trade, the expulsion of the Jews and Moriscos: all these episodes tended to be ignored or marginalized as writers and politicians celebrated Columbus as a pioneer of globalization and a herald of the media age - as the former head of the Prisa media group Jesus de Polanco fatuously described him.

The celebration of the past coincided with a period in which Spain was awash with money, when Spanish companies like Repsol and Telefonica were re-investing in Latin American economies that had been prised open to foreign capital and privatisation drives by a succession of neoliberal governments.

So for Spanish and European politicians therefore, 1992 was a year or promise and achievement in which things really looked as if they could only get better. Of course, there were shadows hovering over this bright panorama - to those who wanted to look.

There was the beginning of the siege of Sarajevo; the neo-Nazi assault on immigrants and asylum seekers; the first seeds of mafia capitalism in the former Soviet Union, the speculative assaults on national currencies that reached a peak in 'Black Wednesday' in September that year, which revealed the inherent instability of a deregulated financial system that was vulnerable to speculative frenzies of the kind we have all become so familiar with.

I remember following that episode from Formentera, and taking some relish at the Major government's inability do anything about it and thinking that at last the Tory years might be coming to an end.

Now 20 years later, I'm back in the Balearics again, watching the European dream unravelled by greed, political incompetence and market-driven cruelty. Here in Spain, the Rajoy government has just announced the biggest budget cuts since Spain's transition to democracy.

The Spanish banking system is tottering on the brink of collapse. Repsol has been kicked out of Argentina. There are leftist or centre-left governments throughout Latin America that have explicitly rejected the neoliberal model that once seemed so irresistible in 1992.

This year there is no triumphalism in Spain, just the daily announcement of new cuts and new examples of the staggering waste and corruption that was allowed to flourish during the last two decades.

Take the Hospital San Pau in Barcelona, where we used to take my daughter when she was ill, which has just gone into administration. Last week, the trust that ran the hospital were charged with misappropriation of funds on a massive scale, that included paying its members bonuses and inflated salaries for no-bid research projects, and in one case paying a former director of the hospital a salary of between €80,000 to €110, 000 for seven years after he lost his job.

Or the ridiculous Parque Europa theme park in Torrejón de Ardoz near Madrid. Financed by the local Partido Popular party, which is now administering Spain's austerity budget, the park contains 16 of Europe's most prominent landmarks, including Tower Bridge and the Brandenburg gate.

But the water in its boating lake was not oxygenated, and is now dank and stagnant, and the town is now 70 million euros in debt because of it. In this respect it is perhaps more symbolic than it ever intended to be. Because this was the kind of society that Spain became over the last two decades, a country run by spivs and crooks whose single objective was to get rich as quickly as possible - by whatever means it took.

20 years is a short time in historical terms, but with every day that passes the assumptions and expectations that once accompanied Spain's annus mirabilis have been revealed as fantasies, delusions and shallow media chatter, that heralded not the beginning of a new era of greatness, but an age of limitless greed whose chickens are now coming home to roost.