In this photo illustration plastic, toy construction workers stand around a one Euro coin.
In this photo illustration plastic, toy construction workers stand around a one Euro coin. - 
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JEREMY HOBSON: Last year, debt problems in European countries like Spain and Greece almost sent the U.S. into a double-dip recession. Well, today Spain's credit rating was downgraded yet again, after Greece took a ratings hit earlier this week.

Let's find out what's going on from Marketplace's Europe Correspondent Stephen Beard. He's with us live from London. Good morning.

STEPHEN BEARD: Hello Jeremy.

HOBSON: So, I thought this problem was cooling off?

BEARD: No, it's hotting up again. The trouble with debt -- if you don't pay it off, it doesn't go away. And some governments and households and companies in the euro zone in countries like Portugal, Ireland, Greece and Spain borrowed so heavily during the boom that there's now serious doubt they'll be able to repay the money. That raises some very uncomfortable choices. Governments can default, or they can be bailed out by tax payers in richer countries, or they can ask for debts to be written off, which puts the banks which lent the money in jeopardy. So some very difficult choices Europe is grappling with right now.

HOBSON: And Stephen why could this such a problem on this side of the Atlantic?

BEARD: Well, if this crisis deepens it could definitely harm the U.S. in a number of ways, but perhaps the most significant according to Simon Tillford at the Center for European Reform, would be the affect on the U.S. dollar.

SIMON TILLFORD: One thing you probably would see if the euro zone went into a period of renewed debt crisis would be a steep fall in the value the Euro and a corresponding rise of the dollar.

A more expensive dollar would make American goods and services more expensive for foreigners to buy, and that would make it more difficult for the U.S. to export its way out of trouble -- a major part of Obama's plan for economic recovery.

HOBSON: Marketplace's Stephen Beard in London, thanks Stephen.

BEARD: OK Jeremy.

Follow Jeremy Hobson at @jeremyhobson