Next Up: Italy's Cratering Economy

With the US debt ceiling crisis finally sort of resolved, the markets are turning their attentions to Europe, and they don't like what they see, reports Reuters. Italy is being hit especially hard, with the yield gap between Italian and relatively stable German 10-year bonds reaching 3.7 percentage points, the highest in 14 years. Spain's 10-year bond yields are 3.8 percentage points higher than Germany's, and the Wall Street Journal notes that if the higher rates of Italy and Spain persist, they could cause "serious disruption."

"The whole point ... in July was to put an end to the rot," said a London-based analyst, referring to Greece's $155 billion bailout of less than two weeks ago. "And they didn't." With markets increasingly buffeting Italy, PM Silvio Berlusconi will take to television this afternoon to announce plans to boost growth and rein in Italy's debt, the second-highest in the Eurozone. Although Spain also suffers serious economic problems, Italy's are worsened by political crisis, notes Bloomberg, as Berlusconi and his allies face continuing charges of corruption. (More Italy stories.)