Greece

European debt markets were edgy in early trading Thursday, poised for short-term gains if the European Union summit produces the expected bailout for Greece but still showing signs of nerves, The Wall Street Journal reported. The cost of insuring European government bonds against default was volatile, sinking at the outset of trading before rising back up to the levels it held Wednesday. The iTraxx SovX Western Europe index, which lets investors buy or sell default insurance on a basket of 15 European sovereign borrowers, traded at 0.97 percentage point.

As Europe edges toward emergency guarantees to stem market panic over one of the most profligate members of the euro bloc, the country that the region turns to for leadership, Germany, is suffering from growing doubts about the European experiment it long championed, The New York Times reported. Reluctant German leaders now find themselves forced to help Greece remain solvent, or risk watching markets attack one weak member after the next, from Portugal to Spain to Italy, threatening the stability of the euro, the European currency Germany fought so hard to create.

Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit. The trouble is, tax evasion in this Mediterranean country is extremely difficult to eradicate, The Wall Street Journal reported.

Any deal by European officials to guarantee the debt of Greece and other troubled nations might keep the crisis from worsening, but it raises another big problem: moral hazard. The concern is that by rescuing a country that for years flouted fiscal discipline, the European Union would be encouraging such behavior rather than discouraging it, The Wall Street Journal reported. One of the strengths of the euro was the idea that when a country joined the European Union it was a one-way trip that came with strict fiscal responsibilities.

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.