Bond yields are spiking, the government is on the verge of collapse, and public debt is out of control with no signs of returning to sustainability.
Frighteningly, this description applies to both Greece and Italy.
More and more signs are emerging that Italy might be the next country to crack under the weight of its sovereign debt.
But with the eurozone’s third-largest economy, Italy—unlike Greece—is just too big to fail.
With Greece seemingly under control for the moment, attention is turning back to Rome and the unpopular reforms it will need to implement to keep its economy afloat.
Though similar to other EU countries, check out how their GDP growth has moved in tandem since 2000. While the Greek economy is expected to stagnate far more sharply than the Italian economy (these numbers are predictions for 2011), economists speculate that growth in Italy could end up disappointing even this modest expansion.
Italy: 50.3% of GDP
Greece: 49.5% of GDP
The economies of both Italy and Greece are heavily dependent upon government expenditures. EU leaders have suggested that both countries could cut back spending significantly if they privatized more assets.
Both Italian PM Silvio Berlusconi and outgoing Greek PM George Papandreou have witnessed rebellion from within their own parties. That turmoil is about to oust Papandreou and rumours are already swirling about a Berlusconi resignation.
Each country's largest banks have at least 10 times more exposure to PIIGS sovereign debt than common equity.
Contagion fears abound. Check out this graph showing interconnectedness between banks in some of the world's largest economies.
Italy and Greece are the most difficult countries in which to do business in the OECD.
For 2011, Italy ranks #87 and Greece holds the #100 spot. So it's actually easier to do business in countries like Zambia and Moldova.