The City of Roses is becoming more continental every day, it appears:

"The issue is rollover risk," said Jonathan Tepper of Variant Perception, a research group based in London and known for its bearish views on Spain. "Spain has to issue new debt plus roll over existing debt to the tune of 225 billion euros this year. Forty-five percent of their debt is held by foreigners so they are dependent on the kindness of strangers."

Countries the world over sell bonds, which help cover the costs of things like social services and government workers' pay. In developed countries, this debt is considered relatively safe because governments can raise taxes or fees to pay their debts. But government revenue has dropped sharply during the recession, and levying higher taxes risks further slowing the economy.

With European budget deficits worsening, investors are now worried that — like American homeowners who borrowed too much in the last decade — some countries may have a hard time paying off their debts....

It is the most vicious of circles: stagnating economies are forced to cut back more, which reduces their ability to generate revenue and thus pay off their debts. As part of the euro zone, these countries do not have the ability to print their own money to stimulate growth and bolster exports, so increasing debt and an increasing prospect of default result....

Predicting where and when the next ripple will be felt is an inexact science. During the Asian crisis in 1997, Russia’s debt default took the world by surprise.

Some even worry that the next debt crisis may materialize closer to home — in the United Kingdom or even the United States, where budget deficits and debt burdens are growing. Both countries are now issuing debt at reasonable levels of 4 percent. The long run of cheap financing may be coming to an end, though, even for the most creditworthy countries.