Jobs that depend on local spending, in restaurants and retail stores, were eliminated in larger numbers in high-debt areas.
She called for new measures to increase the sharing of risk, including possibly jointly issued euro area debt instruments, or, as Germany has proposed, a debt redemption fund.
A monetisation of euro-area debt is imaginable only "if all euro-area governments are in the same boat", says Daniel Gros of the Centre for European Policy Studies, a think-tank in Brussels.Small countries' guarantees are nonetheless more credible inside the euro area than outside it.
"There's a massive amount of debt in the area.
The ratings agency cited an "increased risk of further shocks from the ongoing euro area debt crisis".
New limits would be placed on the ability of authorities to issue debt, a major area of concern among financial watchdogs.
Further headwinds come from a weakening global economy, lower asset prices and rising uncertainty related to the euro area debt crisis.
"The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro area debt crisis".
The Portuguese turmoil may have inflamed eurozone crisis fears, but it has also made other euro area debt look more attractive in comparison, argued Nick Stamenkovic, bond strategist at RIA Capital Markets.
Citing the "rising uncertainty regarding the outcome of the euro area debt crisis," Moody's cut the outlook late Monday for the triple-A credit of Germany, Luxembourg and the Netherlands to negative from stable.
