Greek Debt Cut to Junk - Blind Panic.

You may not follow economic news much but this is huge.  The debt of Greece has been cut to "junk" status by Standard & Poor’s.  As reported by Bloomberg (http://www.bloomberg.com/apps/news?pid=20601087&sid=aBkpE3srsrnA&pos=2):

Greek two-year government note yields surged to more than 17 percent after Standard & Poor’s cut the nation’s credit rating three levels to BB+, or junk.

17% is an unheard of rate for a Soverign Nation. 

Portuguese, Spanish, Irish and Italian securities plunged and German debt rallied as investors sought safer assets after Standard & Poor’s Ratings Services cut Greece three levels to BB+, or junk, and lowered Portugal two steps to A-. Greek notes slid earlier as concern deepened that the nation will ask investors to accept delayed or reduced debt payments.

“We’re entering into a phase of blind panic,” said Orlando Green, an interest-rate strategist at Credit Agricole CIB in London. “Given the inaction of the euro nations to back Greece and to get things done quickly, we’ve found now this inaction has been a big obstacle. That’s not satisfying for the markets, and not for S&P either; hence, the downgrade.”

•We have updated our assessment of the political, economic, and budgetary challenges that the Greek government faces in its efforts to place Greece's public debt burden onto a sustained downward trajectory.

•We are lowering our ratings on Greece to 'BB+/B' from 'BBB+/A-2' and assigning a negative outlook.

•The negative outlook reflects the possibility of a further downgrade if the Greek government's ability to implement its fiscal and structural reform program materially weakens in our view, undermined by domestic political opposition at home or by even weaker economic conditions than we currently assume.

Keep up on this story.  At 17% Greece faces default and catastrophe.  But as I said yesterday, Greece may be a harbinger of things to come for States and Municipalities in the US.