The news in this country may be the talks over the debt limit, but what has stock markets falling worldwide is the sudden realization that the forced austerity and privatization package in Greece is doing almost nothing to calm the fears of the bond markets about sovereign defaults. And they’re not just worried about Greece. Contagion has spread to Portugal, Spain and now Italy. On the Milan exchange, officials banned naked short-selling in reaction to renewed concern. And the bond rates for the Eurozone countries caught up in the debt crisis are soaring. Two-year yields for Greek debt are up to an astonishing 31.1%. And Portugal, Ireland and Italy are all rising.

EU officials are meeting today to determine a response.

Herman Van Rompuy, the president of the European Council, will meet European Central Bank President Jean-Claude Trichet and Jean-Claude Juncker, the chairman of the Eurogroup, for talks in Brussels at around midday, ahead of a meeting of the 17 euro zone finance ministers later on Monday.

Mr Van Rompuy’s spokesman described the gathering as a “coordination, not a crisis meeting”. He added that Italy would not be on the agenda, as ministers focused on thrashing out terms of a second Greek rescue package.

The meeting comes as the Financial Times reported that leaders are prepared to accept that Athens should default on some of its bonds.

And Eastern European countries may be faltering as well.

A couple things here. First, this is what an actual debt default crisis looks like. It’s brutish and nasty, as the bond market just asks for more and more in yields to cover debt. We have the opposite circumstance in this country for the moment, and therefore our debt should not be seen as anything but perfectly manageable. This is what it looks like when the bond markets attack.

Second, all that hope that just slashing spending in Greece and selling off state assets would solve the problem? Yeah, forget it. Greece is still a basket case, and the rest of the Eurozone is being dragged down with it. From a global perspective, this is the crisis in the economy. It has little to do with the United States, but a forced default here would certainly exacerbate it.