Hi. As both, a historian and someone born and raised in the Capital of what used to be a Spanish colony, I think we can clearly understand how and why the Spanish Colonial Empire fell so easily if we focus on how and why the conquest took place.

First, Spanish "conquistadores" had their own interests in mind, and shaping their campaign for power in a fashion that resembled the Iberian "Reconquista". Many expecting to gain their own feudal lordships and fiefdoms by joining into the enterprise of conquest. The Political system placed over the Spanish colonial domains was hardly colonial at all, in the sense that their supposed subordination colonies should have by their Metropolis, hardly ever existed. There's a pretty good book by Gonzalo Lamana titled "Domination without Dominion" published 4 years ago regarding that matter which you can check out if you want more information. The point is that most of the Spanish Empire overseas had a great degree of independence when it came to its local government, nobility, production, land possession and taxes.

On this first couple points about the political structure of the American Spanish Empire, the local nobility gained influence and power during the XVI and XVII centuries, while a new order of spanish "Encomenderos" a similar title to that of a Feudal Lord, only that his fiefdom is tied to its population and not its land, became a class on its own, gaining even more political power than the authorities appointed by the Crown. In fact, in several occasions, these "Encomenderos" rebelled against the crown, or even fought against each other in civil wars. To stop this, the Crown attempted to reduce their power by making "Encomenderos" only hold the title for three generations and then passing them on to the Crown, but the system could be bypassed easily, and when more reforms were made, Gonzalo Pizarro, younger brother of the Conquistador of South America Francisco Pizarro, rebelled agains the Crown. Finally, when the viceroyalty came to be it did not gain power up until the 17th Century, and most viceroys had to negotiate constantly with the local nobles and creoles. So we can tell that politically the power held by the Crown was almost symbolic. For more information on this, I suggest consulting Kenneth Andrien's book regarding this issue, where he studies the case of Peru.

In terms of economy, Dr Margarita Suarez has published a great deal of records showing how ineffective the taxation system was in the Upper Peru, where a great amount of Indian silver was extracted, eventually showing that at least 60% of the extracted silver ended up being sold to smugglers, minted and circulating ilegally, or even kept by the local lords and authorities themselves. The amount of economic power held by the crown was also fading compared to that of the Creoles, local Lords, and Encomenderos. Eventually the Crown simply accepted that its power beyond the sea was fragile, and few reforms were made afterwards.

It was not until the 18th Century that the new Bourbon monarchy attempted to gain control of its "colonies" and actually only since this period you could argue that Spanish America is an actual colonial domain, as I said they could be considered separate kingdoms before this point because of how independent they were. This reforms, though, received the same hostility from local lords and the emrging enlightened groups than those carried out during the 16th and 17th century. Again, the economy was held under strict control of the locals, and there was not much that the Crown could do, that's exactly why so many revolts and rebellions happened through the 18th Century, eventually leading to the ultimate loss of America by the early 19th Century.

Here are my sources up to this point, sorry if most are in Spanish:-Andrien, Kenneth: Crisis y decadencia. El virreinato del Perú en el siglo XVII.-Blas, Patricio de (y otros): La empresa de América. Los hombres que conquistaron imperios y gestaron naciones.-Burga, Manuel: De la encomienda a la hacienda capitalista. El valle de Jequetepeque del siglo XVI al XX.-Lamana, Gonzalo: Dominación sin dominio. El encuentro inca-español en el Perú colonial temprano- Suárez, Margarita: Desafíos transatlánticos. Mercaderes, banqueros y el estado en el Perú virreinal, 1600-1700

As a piece of my own interpretation, I'd like to point out that one could argue that Spain was hardly a colonial Empire, its grasp of its domains beyond Europe was weak, and unlike the Factory model used by Dutch and Portugese empires, which did not focus on creating permanent domains, but permanent trading sites, the effort put into maintaining direct domain of these regions backfired completely, not only the investment in infrastructure, defense, fleets, expeditions, political institutions and authorities was huge, but also futile. Despite all these efforts, these regions basically ruled themselves, and when the Crown attempted to step in and gain control over them, the resistance was great and eventually led to the Independence. This of course focuses on the colonial regions, mostly America, I think we'll have more comments regarding the situation in Spain itself soon too, so I'll just stick with the colonial front of this discussion.

Like you said it all started with the Independence war against the french and the following decades and decades of instability.

In the colonies the criollos (spaniards that had moved to the colonies) were unhappy, while they had become rich from trade they were completely marginalized from the politics. In addition to the rising enlightened ideas and the trade restrictions. After the atragantar battle the spanish navy was weaker, and during the Independence war Councils against Napoleon were created in the mainland (they created the 1812 Constitution) and in the colonies.

The councils in the colonies declared independence while the war was happening but once it ended, all the attempts failed except in Paraguay. Fernando VII had promised to become liberal after the war, but he rapidly restablished absolutismo with the Persian Manifest. During his reign he would constantly go form being absolutist to liberal... Fernando's decision to go back to absolutism created a desire in the colonies to be emancipated from Spain.

While the all the revolts were happening in all of the colonies, Spain didn't really pay attention to them, because they have bigger problems at the time. In Spain, constant military coups were happening but were unsuccessful, but suddenly on the 1st of January 1820 Coronel Riego carried out a coup with the help of troops that were about to embark to America to help with the revolts, and this time the coup was successful, so all those troops never made it to the colonies. While the liberals were in power, constant coups by the absolutist were ongoing. This was one of the main reasons why Spain didn't devote the necessary troops to suppress the revolts in America. Eventually the Colonial Empire in America was lost, and the only remainder colonies were Cuba, Puerto Rico and the Philippines.

The lost of its colonial empire had very dire consequences, it worsened the spanish economy and worsened the ongoing crisis, while loosing an incredibly big trade market and resources and lost its place as a Global Power.

From then on Spain remained in a constant state of instability, the creation and failure of the First Republic, and the three carlist civil wars that went on from 1833 to 1872. Along with the constant civil wars, was the failure.

During the Restauration period, Spain tried to have stability, bringing back the monarchy, and while it worked for some time trouble with the colonies soon reappeared. After the complete disaster and humiliation of the Spanish american war, they lost Cuba along with Puerto Rico and the Philippines that went on to become part of a US protectorate.

This is what's known as the 98 Crisis or disaster. This created a national crisis, and while the economic consequences were not big the moral and political ones were devastating. It put focus to the decadence and the "Problem if Spain". Meanwhile nationalistic movements were starting to rise once again in Catalonia and The Basque Country.

While some revisionist tried to improve the overall situation, The tragic week of Barcelona happened in 1909, which caused the fall of Maura's government and the Revisionist rose to power. They tried to improve the economy and society with policies, but its leader was assasinated by anarchist in 1912 and all the reforms were stopped, while the political instability grew. Several crisis happened until they culminated in the General Crisis of 1917. There was a military crisis that resulted in the increase of the military power in the political life, the political crisis was the result of a huge internal dibujo were the parties didn't have majorities and were extremely weak. Socially there was a general strike made my the marxist and anarchists. There was an incredibly high social violence and instability.

While all of this was ongoing Spain had been at war with Morocco since 1904, and in the Disaster of Annual the Spanish military was defeated in what was a huge humiliation. All of this eventually culminated with the military coup and the dictatorship of Primo de Rivera.

After the dictatorship fell the King, the King was eventually expelled and the Second Republic was stablished. The second republic was a disaster, all through it there the tension steadily increased, and Spain became more and more polarized. The social unrest grew until there was no coming back and a military coup happened. During the Civil War in 3 years the Republic had 7 president.

Franco's dictatorship was finally stablished, the nationalists had been aided by Nazi Germany that had used the war as military practice and to try out strategies, and so did fascist Italy. Even though Franco remained neutral in WWII, their help in the Civil War caused the International community so isolate Spain after WWII.

After the war Spain had been destroyed, but unlike the Allies, they were forced to age a self suffice to policy, due to not being able to get help from any of the Western democracies. Due to it being a dictatorship Spain was also denied entrance from all international organizations. After this long post war period, Spain did manage to have a period of economic growth, but this was just catching up to the rest of the International community.

After Francis death, it transitioned into a democracy but it had become extremely dependent on oil, and after the oil embargo there was a great economic crisis. Which it somewhat recovered from.

So yea, to summarize it a bit, while Spain did not partake in the World Wars, all through the 19th and 20th century were constantly at war and continuous instability, and slow economic and industrial growth. And while countries such as Germany, France and England were also devastated but the war, they had the help of the Marshall Plan and the overall help of the international community while Spain did not receive the aid, even tho its conditions were equally as bad.