The contagion is spreading so rapidly through Europe now that is is almost impossible to keep up with. Rates are now rising across the board in Portugal, Italy, and Spain. In addition, the markets have now turned on France, one of the few remaining AAA rated nations that currently backstop the European bailout. France is now seeing interest rates and their CDS (cost to insure the debt) rise simultaneously.
The chart below from the Economist provides a great visual for those more color coordinated on who is in the most danger by looking at debt to GDP (the total size on an economy which is used to determine the ability to pay off the debt).
My money is on coordinated action from the ECB, the Fed, and a new participant (the IMF) to backstop the financial system; after an initial major deflationary downdraft. Every day the ECB waits to step in, however, makes it more likely they will lose control of the contagion spreading through the financial system.
This morning CNBC interviewed Blackrock's CEO Larry Fink, who said liquidity is vanishing everywhere in Europe. He sees a major crisis erupting in the markets in the next two weeks if major action if major action is not taken.