In other 'peripheral' economies, of course, the situation is even more dire.
Countries like Ireland, Greece, Portugal and now Spain are in the throes of a seemingly endless process of trying to deal with private bond markets that simply do not believe that the governments will repay their existing debts in full.
This creates a crazy downward spiral.
The problem is this: the more the financial markets hammer the government bond markets, the more the governments of Greece and Spain are forced to announce and try to implement severe austerity packages that entail large cuts in public expenditure with adverse effects on employment and output.
So they keep announcing budget cuts that involve declining spending on crucial amenities like schools and hospitals and significant effective wage cuts for public sector employment.
Quite apart from the public discontent that this involves, this strategy is macro-economically stupid. The multiplier effects of these moves are obviously negative, and so the economy tanks.
This makes it much harder for all the private borrowers - large and small firms, household enterprises, individuals who have taken credit to buy homes or purchase consumer durables, credit card holders, and so on - to repay their debt, because their incomes also collapse.
So the economy gets into a vicious downward spiral, in which even previously solvent and liquid borrowers become progressively less liquid and end in insolvency.
This is part of the bust phase of a classic credit cycle.
The difference here is that it is being helped along by governments who seem to be powerless to confront the workings of private bond markets.
Image: One of the many protests that Ireland has witnessed in recent times.