The European system is facing another bout of downgrades , with Portugal getting downgraded to near Junk status by Moody’s yesterday. That is a bad sign indeed and things are only expected to become worse for Greece and Ireland in the coming months and they also might find it difficult to raise funds from international lenders at reasonable cost.

Germany government is facing flak from their citizens and that could force Merkel to stop supporting blanket free money to the rouge European nations i.e, Portugal, Ireland, Greece and Spain. That would only force these countries to go in for debt default, and that in turn would pull down the entire European zone into an economic crisis.

The spiraling crude oil prices are only going to make things worse for the European countries and we will have to just wait for the eventual default news to flow from the region in the coming months.