One immediate fix, analysts suggest, could come from Europe's central monetary authority, the European Central Bank. It could start heavy purchases of Spanish and Italian bonds to force their borrowing rates down - thereby giving the governments breathing room to pay their bills.
"The ECB has to just buy Spanish bonds without limits until the markets get tired, and they have to do it soon," said Gayle Allard, an economist and labor market specialist at Madrid's IE Business School.
The heightened concerns surrounding some of the eurozone countries are also being focused on those countries' retail banks. Analysts and market watchers are concerned that once confidence in a country's economy starts to decline, the banks are caught up in the panic and savers rush to withdraw their savings.
Many Greeks have been gradually withdrawing their savings over the past two years as the country's financial crisis deepened. Times of heightened political instability have seen the outflows spike, with some money later returning.
Spain got a taste of potential bank panic Thursday when shares of Bankia SA plunged after a newspaper reported it had suffered deposit withdrawals worth €1 billion in the week since the government announced a plan to effectively nationalize it and clean up its heavy load of toxic property assets and loans. The shares rebounded Friday after the bank and the government denied a run happened, but customers were rattled.
That came just hours after Moody's issued its downgrade of Spanish banks, and just days after the agency did the same for 26 Italian lenders struggling with the effects of the country's weak economy and austerity measures.
Allard, an American who has lived in Spain for decades, said she was surprised recently when Spaniards started asking her what currencies besides the euro might be a good place to park their money if they sense they need to move money abroad.
Increasingly testy Spanish government officials insist they have put in place a litany of unpopular austerity measures since January that have raised taxes, forced regions to impose deep budget cuts, clean up an antiquated labor system by making it easier to hire and fire workers, and required banks to raise the amount of money in place to cover problematic assets and loans.
New conservative Prime Minister Mariano Rajoy warned bluntly this week that Spain risks being locked out of financial markets, creating "a serious risk that (investors) will not lend us money or they will do so at an astronomical rate.
He's expected to drive those points home when he meets Sunday in Chicago with German Chancellor Angela Merkel on the sidelines of a NATO summit, and in a Paris visit next Tuesday with newly-elected French President Francois Hollande.
In Lisbon, lunchtime shoppers expressed bewilderment and dismay at the latest twists in international finance, predicting bad times ahead for Portugal, in recession for the third time in four years with unemployment at a record 15.3 percent.
"Who knows what's going to happen next. Every day, it seems, there's just more bad news," said Augusto Paulinho, a retired metalworker who said it's hard to make ends meet on his monthly pension. "I can't see who's going to solve this mess. But we can't keep going on like this. It's terrible."
Barry Hatton in Lisbon, Daniel Woolls and Harold Heckle in Madrid and Elena Becatoros in Athens contributed to this report.