A Spanish newspaper has used the naughty "A" word. Abyss.
Italy and Spain are close to the abyss (Translated from Spanish).
For years, financial crises and defaults of countries have been associated with Latin America, Southeast Asia, the developing world. For generations, emerging countries were suffering from currency crises, bank failures, financial meltdowns and other economic woes known to modern man. These usually occur panic episodes in summer, when flocks of speculators have more ability to influence markets. It's summer and the crisis gets worse, but this is not Latin America or Asia: Europe is the new frontier of fear. The European Union was yesterday unable to give a change of direction and the crisis of peripherals (Greece, Ireland and Portugal) rammed full heart of the euro to a lesser extent Italy and Spain, totaling over 100 million inhabitants and a GDP of 2.5 trillion euros, peered over the precipice, with steep drops in the stock and especially with a severe correction in the debt markets.
Italy and Spain face a major problem. The main one is terrible crisis management by the European authorities, with several countries, primarily Germany, but also the Netherlands, Finland and Austria, making it difficult to achieve agreements. But internally, Spain faces a fragile recovery, combined with the effects of the bursting of the housing bubble, a time bomb for the accounts of banks and savings banks. Italy also faces a serious internal political crisis, adding to a stalemate that lasted for years and growing doubts about the health of their banks, which account for most of the huge public debt trans (120% of GDP, in absolute numbers the largest section of the third world debt, behind only the U.S. and Japan).
And this is just the beginning