What contributed to Spain going bankrupt?

Answer 1

You mean during the reign of King Philip II ? Spain's American colonies and their regular supply of shiploads of silver to Spain in a way contributed to it. Just like many oil producing countries today, these easy riches produced two effects: 1) Spain totally neglected the build-up of economic activity outside of exploiting its American silver and gold mines and 2) it used its wealth to further its political goal to be a major league player and to wage or support a number of very costly wars elsewhere: in Italy, France, the Dutch Republic, England, northern Africa and elsewhere against the Ottoman Empire....only to find that the cost of waging these wars outstripped his American and Spanish income.

With an underdeveloped national economy and many of those wars not reaping any material benefits, Philip II was continually short of money and had to borrow huge amounts of money from bankers. These bankers then got as collateral the good 'local' sources of tax income of the King, like the right to custom duties in Spanish harbors. The result: Philip's debts rose, while the income to pay them back with declined. In the end, Spain - or rather, Philip - had to default on its debt several times. And after each time new loans were only to be had at a higher interest rate and with even more collateral (and remaining sources of income) to be offered. So bankruptcies would follow each other in ever-quicker succession.