I know everyone’s focused on Greece, but today’s big story really is Spain. For the first time, the interest rate on its ten-year bonds went over the magic number, 7%. That’s the point at which Greece, Ireland, and Portugal had to get bailouts. Spain’s economy is bigger than those three combined, so bailing out Spain would be a huge deal.
Italy’s interest rate went over 6% today. Bailing out Italy, whose economy is bigger than Spain’s, would probably be impossible. Italy is the third largest economy in Europe, after Germany and France.