This only sounds like bad news:

FRANKFURT — Europe’s debt crisis deepened still further Tuesday after the ratings agency Standard & Poor’s downgraded Greek and Portuguese debt, investors sold off government bonds amid fears of a default, and workers in the two countries took to the streets to protest austerity measures.
S.&P. downgraded Greek government debt to junk status, saying in a statement, “Greece’s economic and fiscal prospects lead us to conclude that the sovereign’s creditworthiness is no longer compatible with an investment-grade rating.”
The ratings agency also downgraded Portuguese government bonds, but they remain well above junk status.

Don’t worry, Portugal: You’ll get there!

One of my consolations in life is my enduring belief that the markets will, in the end, produce the reforms that politics so obviously cannot. Greece — and by way of Greece, the rest of Europe — is getting the message in no uncertain terms: You guys cannot continue to borrow and spend money like this. We’ll still loan you money for now, but we’re going to charge you Vegas loan-shark rates — and you’re lucky to get even that. This. Must. Stop.

Today Greece, tomorrow Portugal … and California cannot be far behind.

The transition is going to be ugly, though. How ugly? Skip the political theorists and go to Moody’s, where the analysts are predicting government “fiscal adjustments of a magnitude that, in some cases, will test social cohesion.”

“Test social cohesion.” Mark those words.