The Return of Greek Tragedy

Economist Joseph Stiglitz is warning that Europe is at risk of going into a double-dip.

According to Bloomberg, the Noble Prize winner told Dublin-based RTE Radio on Tuesday that when the Euro-area governments stepped up efforts to cut deficits to below the European Union limit of 3 percent of gross domestic product, so many in Europe focused on this "3 percent artificial number, which has no reality and is just looking at one side of a balance sheet," Stiglitz said.

Take Greece: even with the combined $147 billion bailout packagefrom the EU and the IMF (International Monetary Fund), ultimately many believe, the country will have no choice but to restructure, following the country's debt crisis earlier this year,

In April, the Greek financial crisis widened the gap in the 10-year debt yield between Greece and the German bund to its largest in the lifetime of the Euro—6.11 percentage points.

Today, that spread remains very large with the yield on the 10-year German bundfalling nearly 50 basis points since the start of the month and stood at 2.21 percent on Tuesday.

The concern is that Germany may wind up yielding less than 2 percent within the next few weeks and join the likes of Japan,whose benchmark 10-year declined one basis point to 0.925 percent on Tuesday. Meanwhile, Greece's 10-year climbed 30 basis points to 10.55 percent causing renewed concerns about the health of its economy.

Right now, it looks like the European recovery is showing signs of weakening and possibly sliding back.

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