Europe's debt crisis going from bad to worse

The danger is most pressing in Italy, where the rate the nation must pay to borrow money for a decade rose Friday for the fifth straight day, to 7.23 percent from 6.64 percent a week ago. The increase came in an auction of new bonds for which demand was weak — pushing the rate the Italian government must pay to borrow money for two years up four-tenths of a percentage point, a remarkably big one-day jump, to 7.5 percent…

Over recent days, the sense of impending threat has even spread to nations that have generally sound finances. Standard & Poor’s cut its long-term credit rating for Belgium to AA on Friday from AA+, expressing concern that the nation may have to engage in costly bank bailouts that will strain its finances.

Nations that have seen a sharp run-up in their borrowing costs in recent days also include France, Austria and Finland.

Investors are selling off bonds of almost all European nations out of fear that a self-reinforcing cycle is taking hold in which higher borrowing costs further strain governments’ finances, threatening losses among the banks that own government debt and further slowing an economy that is already on the brink of recession.