This is quite troubling. The Australian reports:

The Dow Jones industrials had their worst drop in nearly three months after Standard & Poor's downgraded the sovereign debt of Greece and Portugal. Investors are concerned that those countries' problems could spread across Europe and hamper economic growth elsewhere.

Standard & Poor's said it was lowering its rating on Greece's debt to BB+ from BBB-. That means that the country's debt does not carry the investment grade tag.

That effectively means that Greece's bonds are now junk bonds.

One story I read this morning is that a rumour is circulating the financial markets that Greece will default on it's debt, maybe as early as next week (from Simon Johnson at Huffington). He says that those telling people could be "telling the trut" or "perhaps they atre lying". Why would they lie? To make more money of course.

But the troubling part for me is that the GFC might have been just the opening act. We might be about to see the main act, where the debt that is held by governments (and individuals) causes a problem that makes the GFC look like a small sneeze.

Are we on the verge of a real crisis?