With the 50% loss on the Greek bonds, sovereign-debt bondholders have come to realize that the promises made by governments don't mean a thing. Add to that the need to raise capitalization rates, and no one is lending money to the smaller countries in Eastern Europe.
Hungary, Bulgaria, Croatia, Ukraine and perhaps other Balkan states are all in trouble. Most of their loans come from western Europe.
Lars Christensen from Danske Bank said Balkan states are in the firing line as Greek lenders batten down the hatches. "Bulgaria faces a significant squeeze because Greek and Italian banks make up 60pc of loans," he said.Not looking good.
The story in Hungary is complicated by an erratic government accused of violating EU principles across the board, from confiscating private pensions and imposing an ad hoc bank tax, to judicial abuse and curbing press freedoms.
None of those countries are in the Eurozone, but they are in the European Union.