In terms of Google search popularity, Greece is off to a great 2010. We're only two and a half months in, and the small Mediterranean country has seen the most headline coverage since 2004 (when the Olympics finally returned). Unfortunately, as Toyota and Lindsay Lohan can attest, Google searches don't always mean that things are going well.

All the hoopla revolves around Greece's debt binge. Greece has been flouting the rules of the European Union (called the Maastricht Treaty) by running fiscal deficits well above 3% of GDP and maintaining a debt-to-GDP ratio above 60% for several years. In 2009, the Greek government spent $42 billion more than it brought in via taxes, equal to 12.7% of the country's GDP.

While some of this was hidden (thank you very much, Goldman Sachs (NYSE: GS)!), most of it was out there for everyone to see, and Greece wasn't alone in its indiscretions. So, then, why all the attention now?

Because now it matters
With the onset of the global recession, markets became a bit more jumpy about risk. When financial giants like Bank of America (NYSE: BAC) and Citigroup (NYSE: C) revealed that billions of dollars of assets on their balance sheets weren't actually worth the paper they were written on, people began inspecting financial statements much more closely. This scrutiny started with companies, but it quickly moved to national balance sheets.

With debt at 113% of GDP and the previously mentioned gaping budget deficit, Greece joined a distinguished group of European countries affectionately named the PIIGS (Portugal, Ireland, Italy, Greece, Spain). These countries boast the sorriest fiscal situations in Europe, and Greece is at the head of the table.

Timing is everything
Greece is special because it has $23 billion in debt that comes due in April and May, and, well, there have been questions about the government's ability to pay.

Usually, new bonds would be issued to pay the old ones (the debt would be rolled over), but with investors on the defensive, the interest rates on the new debt could be prohibitive. Greece is currently paying about 12% of its GDP on debt-servicing costs, and it has been enjoying subsidized rates because of its membership in the European Union (EU).

These days, the market is requiring a 3.5% to 4% premium for Greek bonds above German bonds, which are considered Europe's risk-free debt instruments. Prior to the global recession, the premium was less than 0.5%.

At a cost
To earn some points with credit markets, Greece proposed austerity measures that would cut spending by $11 billion to $14 billion this year. However, the EU and the financial markets weren't satisfied, so in early March, the government came back with additional cost savings amounting to another $6.5 billion.

This apparently convinced the markets of Greece's desire to change its ways, and a sale of $6.9 billion in 10-year bonds found more than enough buyers. However, the interest on the bonds was 6.37%, not an attractive rate in these days of historically low interest rates.

On top of a high interest rate, the Greek government now has tens of thousands of angry civil servants who are striking and rioting over the pension freezes, pay cuts, and higher taxes that were part of the austerity program. Politicians aren't known for their steadfastness in light of constituent unrest, so it remains to be seen if the proposed measures will be able to be implemented.

Uncertain times
Astute readers will notice that $6.9 billion is less than the $23 billion that matures in the next three months, so there is further debt-raising that needs to take place in a short time period. Investors are finicky, and just because they accepted the government's word in early March that its deficit would be cut, doesn't mean they will again in late March or April.

Markets hate uncertainty, and there is a lot of uncertainty surrounding sovereign debt. Greece's recent victory doesn't mark the end of this drama. There will be further tests, and any future failure could send markets around the world back into the dark days of early 2009.

In the meantime, it is likely we'll see otherwise innocent stocks get hit by the market because of their Greek roots. Shipping companies like Danaos Corp. (NYSE: DAC) and Navios Maritime Holdings (NYSE: NM) could be in for another pounding after weathering last year's drop in global trade.

National Bank of Greece (NYSE: NBG) has also been recovering after the beating European banks took in the stormy days of 2008, but will likely feel the pressure of Athens' financial woes nonetheless

Not alone
Greece may have a fiscal debacle on its hands, but it isn't the only one. Its fellow PIIGS countries aren't much better off, the U.K. has rapidly rising debt levels, and the U.S. is facing hard decisions, too.

The U.S. debt-to-GDP ratio is currently only about 55%, but with a deficit on track to exceed $1.4 trillion this year (about 10% of GDP) and expectations of trillion-dollar deficits for years to come, that will be rising dramatically. And that's before we consider ballooning entitlement programs like Social Security and Medicare.

This isn't to say that the U.S. is going to be the next Greece, but in order to address our own fiscal shortcomings, Americans will face decisions not unlike Greece's. This could mean higher taxes and reduced public spending in the not-too-distant future. This would result in slower economic growth and upset citizens, both of which tend to depress market returns.

No crisis should be wasted, and so to learn about the economic impact of government fiscal tightening firsthand, The Motley Fool is sending a team to Greece next week. We'll be talking with local investment bankers, academics, and citizens to hear what they see for their country and economy in the months and years ahead.

If you are interested in receiving our reports from the ground, simply enter your email address below and they will be delivered to your inbox.

Nate Weisshaar does not own any of the stocks mentioned above. Google is a Motley Fool Rule Breakers recommendation. The Motley Fool disclosure policy loves a Quiet Riot.