Uh Oh.

This can't be good.

Berlusconi's Italy is debt-ridden, shouldering a burden worth €1.85 trillion, more than twice as much as Greece, Ireland and Portugal combined. In the next 12 months alone, €300 billion of that debt will have to be refinanced -- more than the €250 billion in the euro-zone bailout fund. Last week, confidence in the country seemed to disappear from one day to the next.

Rating agencies, led by Moody's, threatened to downgrade Italy's credit rating. Private investors panicked and sold their Italian investments, US hedge funds bet gigantic sums on the further decline of Italian government securities, and the Milan Stock Index declined for an entire week.