Europe scrambled for ways to prop up Greece's crumbling government finances Tuesday, restoring some stability to this unlikely keystone of the global financial system and sending markets higher around the world, The Washington Post reported. But the underlying economic problems facing Greece and some other European countries mean that radical cutbacks to government spending and more social pain are likely to follow as these countries move to avert a sovereign debt crisis, in which nations find themselves unable to pay on their obligations.

Germany is considering a plan with its European Union partners to offer Greece and other troubled euro-zone members loan guarantees in an effort to calm fears of a government default and prevent a widening of the credit woes, people familiar with the matter said, The Wall Street Journal reported. EU leaders are expected to discuss the situation at summit in Brussels on Thursday.

The problems facing Greece are just the beginning, Spiegel Online reported. The countries belonging to Europe's common currency zone are drifting further and further apart, and national bankruptcies are a distinct possibility. Brussels is faced with a number of choices, none of them good. Accruing debt is becoming increasingly expensive for other countries in the euro zone as well, among them Portugal and Spain. The southern members of the euro zone are especially being eyed with mistrust.

Greece's government was tackling the thorny issue of pension and wage reform Tuesday, part of its plan to fight a debt crisis that has alarmed global markets, even as strikes were being planned nationwide, The Wall Street Journal reported. Prime Minister George Papandreou's center-left government is accelerating austerity measures meant to calm markets and European Union partners, who have urged Athens to swiftly deal with the crisis. Mr.

Prime Minister George Papandreou got a measure of relief Friday in his fight to curb Greece's runaway deficit, as protesting farmers scaled back highway blockades in opposition to the government's austerity measures, The Associated Press reported. The prospect of strikes and protests have raised fears Papandreou won't be able to push through an austerity plan aimed at dousing the country's financial crisis, which has undermined the euro because markets fear Greece may default on its debts.

A messy Greek default would harm almost everybody, The Economist reported in an editorial. As markets and governments know only too well, behind Greece stand others: Portugal, Ireland, Spain and even Italy, the world’s third-biggest sovereign debtor. Hence the selfish case for other euro-area countries to help. There is plenty of money around. The EU can advance structural-fund aid that is due to be paid in future years. The European Investment Bank can lend more.

European Central Bank President Jean-Claude Trichet delivered an impassioned defense of Europe's common currency as the market continued to cast doubt on the ability of Greece and other debt-ridden euro zone countries to get their deficits under control, The Wall Street Journal reported. Mr. Trichet's remarks came as worries spread through financial markets that Greece's fiscal woes will extend to other countries including Portugal and Spain. The cost of insuring the sovereign debt of those countries against default soared Thursday, putting downward pressure on the euro.

The euro gained against the dollar Wednesday after the European Commission accepted Greece's budget-reducing plan, though the common-currency has come off its highest levels of the day, The Wall Street Journal reported. Many currency analysts said the acceptance of Greece's plan, in which it detailed how it would strip spending from an over-the-limit budget, had already been "priced in" to the euro, limiting its gains on the report's release.

Outgoing EU economics commissioner Joaquin Almunia has warned that Greece will have to adopt new austerity measures if it fails to meet targets set out in an already tough emergency budget, The Irish Times reported. Mr Almunia said the budget programme was achievable but prone to risk. By mid-March, Greece will have to submit its first special report to Brussels on the implementation of the measures, with a follow-up due in mid-May.

Are EU policy makers willing to let Greece suffer a little? The Source asked. Absolutely. Greece is paying about 3.5 percentage points over benchmark rates in order to borrow, which is a hefty tax on the country’s already strained public finances. But EU officials in Brussels note that a bailout might encourage “moral hazard,” allowing yet another Greek government to skirt much-needed reforms. The bloc’s finance ministers and bureaucrats justifiably feel duped.