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Greek debt crisis: Bailout likely, but will it be enough?

The Greek debt crisis continued to roil European debt markets on Wednesday after a leading rating agency cut the country's debt status to junk. While short term aid to Greece is a near certainty, economists warn that more international cash – and painful political steps in Athens – will be needed.

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Greece saw its borrowing costs spiral higher once again Wednesday, after Standard & Poor's downgraded the country's bonds to junk status. Stocks around the world tanked after that downgrade.

Michael Probst/AP

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Azerbaijan, Colombia, Egypt, and... Greece. This week, the Hellenic Republic joined a rather unfortunate club of countries whose bonds are rated "junk" by Standard & Poor's, setting off a flight from Greek debt and emergency meetings across Europe to arrange a bailout.

Neighbors with high levels of debt have been swiftly punished. S&P has also cut the debt ratings for Spain and Portugal, and borrowing costs for both governments have surged this week.

The euro fell to a 12-month low against the dollar Wednesday. The risk premium to hold Spanish debt – the price investors demand over much safer German debt – rose to more than 1 percentage point. Investors are now demanding more than 11 percent return to hold Greek 10-year bonds, compared with a little more than 3 percent for the German 10-year, the European benchmark.

IN PICTURES: The top 10 things Greece can sell to pay off its debt

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