Europe’s massive deficit spending is finally catching up with it. As Stefan Theil writes for Newsweek, markets reacted sharply this week “after rating agencies downgraded the public debt of Greece and warned about the outlook for several others.” With a deficit running at over 12% of GDP, Greece runs a serious risk of becoming the first developed country since the end of World War II to default on its debt.

Another South European country, Spain, is not much better off. We previously warned that its stubborn socialist policies are in fact hampering all of Europe; last week, Standard & Poor’s slapped a negative outlook on the country.

France and Germany tried to do their best by assuring investors that they wouldn’t let the weaker European states fail but there is internal discord that makes their promise rather an uncertain one. Unlike Germany, for instance, Greece and Spain have little of an exit-strategy. “Germany is unlikely to go through the pain of raising taxes and slashing spending while letting its neighbors keep their freewheeling ways,” notes Theil.

Yet according to France that “freewheeling” is exactly what much of the Western world has been doing for the past several decades. French President Nicolas Sarkozy blamed the “Anglo-Saxon model” of capitalism for the very recession we are—even though the countries that have rejected it most vehemently are the ones currently struggling the most.