From Krugman ...
Not good news in stock markets -- but you really have to look at the bond markets to get the full awfulness of the situation.
The US 10-year bond rate is now down to 2.5%. So much for those bond vigilantes. What this rate is saying is that markets are pricing in terrible economic performance, quite possibly a double dip. And it also says that Washington's deficit obsession has been utterly, totally wrong-headed.
Meanwhile, Italy's spread against German bonds is soaring even further. What are markets pricing in here? Default as a real possibility; maybe even euro breakup. The latter certainly sounds a lot more plausible now than it did a few months ago.
Really makes me wonder what the President's plan is for the economy. And that's not a dig. I'm really curious.