As a result, Spain's borrowing costs could rise further as investors fret both about the government's solvency and about their place in the creditors' queue.

ECONOMIST: Why the rescue plan for Spain is not enough

Borrowing costs may rise, which could prompt non-American companies to take business elsewhere.

ECONOMIST: Sovereigns v creditors

The rise in borrowing costs could have a negative effect on the economy rather than the positive stimulus effect the Fed anticipated.

FORBES: Bonds And Dollar Defy Bernanke

As Mr Nerb implies, a rise in borrowing costs at this juncture could damage Germany's recovery, and with it Europe's hopes of a strong upturn.

ECONOMIST: Poised for take off? | The

The stalemate unnerved financial markets and there is concern that a failure to tackle economic problems could lead to a rise in borrowing costs and more instability for the eurozone's third largest economy.

BBC: Italy President Napolitano begins coalition talks