As the following graph illustrates, those European nations that have spent too freely and borrowed too much are discovering that there’s a price to pay for their profligacy. With the market price of insuring against default increasing rapidly, odds are that Portugal, Greece, Spain, Italy, the United Kingdom, and Austria, among others, will find it increasingly difficult to remain in control of their economic destinies.
Of course, not of all the basket cases are located outside our shores. In the United States, there are plenty of municipalities -- not to mention the federal government itself -- in financial distress because of poor planning, corruption, misguided policies, and a failure of leadership. Here again, more and more investors and creditors are putting their money where their mouths are and saying: “enough is enough.”
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