When it comes to sovereign risk ratings, it could be a case of "out of Greece and into the fire" as venerable credit-rating agency Standard & Poor's this week joined Moody’s in issuing a sobering warning that Italy could be the next European nation in line for a downgrade.

With bondholders already nervous about Greece’s shaky debt, Italy’s cabinet on Thursday approved an austerity budget package cutting some 47 billion euros ($66.55 billion). The goal was to insulate the country from the crisis facing Italy’s neighbor just across the Adriatic Sea. But, so far, the measure doesn’t seem to be working.

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