MADRID (MarketWatch) -- Pressing the button on a red-hot subject for financial markets, Moody's Investor Service on Thursday warned that severe contagion threat to banking systems of southern Europe could "become a common theme."
Moody's, which put Portugal's credit rating on three-month review on Wednesday for a downgrade, said the banking systems of Portugal, Spain, Ireland, Italy, as well as the U.K., are "increasingly moving into the focus of the markets."
"Although the challenges in these six countries are different, the potential for contagion from their sovereign as observed in Greece is also spreading to some other countries, and to the extent this affects these countries it could dilute some of the inherent differences of the banking systems and impose a common threat," said Ross Abercromby, senior analyst at Moody's who authored the report.
Citigroup says markets could fall 20% over the Greece mess alone - the Dow is down 7% since the highs of April - so things could get really bad, really quick.
If the contagion spreads, look out below.
I know Obama was doing a victory lap over last month's job's numbers today - four straight months of positive job growth and a trajectory upward.
But those numbers are all BEFORE the sovereign debt crisis hit the markets.
Let's see if hiring in the private sector continues with panic spreading throughout the financial world and credit markets seizing up again.
And remember, states and municipalities are set to lay off hundreds of thousands of government employees in the coming months.
With the government stimulus spending ending soon, with fear spreading over the sovereign debt crisis, with states and municipalities laying off hundreds of thousands of people - we could easily see huge negatives for GDP in the second half of the year.
And those will be Obama's negatives.
That will be Obama's recession.
And as people lose their homes, their jobs, their pensions (but not their health care because Obama is going to force people to buy some), I guess they can all say they got change they could believe in.
But we certainly didn't get anything different than the Bush years from Obama.
We got more bailouts for the banks, bullshit regulation and underfunded regulators for the financial markets, a renominated Ben Bernanke, the president defending Goldman's Lloyd Blankfein over the ludicrous bonuses handed out for selling people fraudulent products.
That's what we got.