Independent article.

But a BIS report warned yesterday that repeating these measures could be impossible. It said: "Events coming out of Greece highlight the possibility that highly indebted governments may not be able to act as a buyer of last resort to save banks in a crisis. That is, in late 2008 and early 2009, governments provided the backstop when banks began to fail. But if the debts of the government itself become unmarketable, any future bailout of the banking systemwould have to rely on external help." Central bankers fear Europe is running out of "external backstops" that could step in, other than the US and the International Monetary Fund. This has unnerved capital markets in the EU, prompting some sharp swings in the value of shares and other financial instruments in recent days.

Timothy Garton Ash in the Guardian.

I hope for the best at the G20 summit this weekend; I hope against hope. But if I were you, wherever you are, I'd prepare for more pain -- and watch out for another avalanche.

Independent report.

European leaders meet in Brussels today amid growing fears that Spain, Europe's fifth-largest economy, is preparing to ask for a bailout which would dwarf the €110bn (£90bn) rescue plan for Greece.

Telegraph article.

A small band of hedge funds is now building up a series of sizeable bets on Britain defaulting. In the past few weeks, they have placed more than $3 billion worth of bets on that precise outcome in the credit default swap market. History -- three centuries without default -- suggests that they will be proved wrong. But these are unprecedented times. Had Britain joined the euro, it would certainly have shared Greece's fate, and would have been too big to be bailed out.

Times report.

The Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy.

Telegraph report.

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.

Telegraph report.

There is evidence that bets against the euro are being placed by important investors around the world, which last week took the euro to four-year lows on fears Greece, Spain and Portugal may be forced to leave the single currency.

Dmitry Orlov writes.

The drawing of parallels between industrial accidents is a dubious armchair sport, but here the parallels are just piling up and are becoming too hard to ignore:

- An explosion at the Chernobyl nuclear power plant in 1986 spewed radioactive waste across Europe

- A recent explosion and sinking of BP's Deepwater Horizon oil drilling platform is spewing heavy oil into the Gulf of Mexico

Telegraph report.

Foreign holders of Greek and Portuguese debt have seized on emergency intervention by the European Central Bank to exit their positions, leaving eurozone taxpayers exposed to the credit risk.

Dan Roberts in the Guardian's CiF.

France threatens to leave the euro. German savers hoard gold. The Bundesbank works on a plan B to restore the Deutsche Mark. It's fair to say even a $1 trillion bailout hasn't been enough to stop the rumour mill dogging the European single currency this week.

Telegraph report.

President Nicolas Sarkozy slammed his fist on the table and threatened to pull France out of the euro at a meeting of European leaders deciding Greece's aid package last Friday, according to Spain's El Pais newspaper.

Edmund Conway on his Telegraph blog.

Mervyn King, Governor of the Bank of England, fears that America shares many of the same fiscal problems currently haunting Europe. He also believes that European Union must become a federalised fiscal union (in other words with central power to tax and spend) if it is to survive. Just two of the nuggets from one of the most extraordinary press conferences I have been to at the Bank.

Guardian report.

The shock decision to mobilise hundreds of billions of euros does nothing to fix the fundamental malaise plaguing Europe -- the vast macro-economic imbalances within the eurozone. But the package takes the pressure off, removes the short-term likelihood of sovereign debt default in southern Europe, buys time for struggling countries to get their acts together, and for Brussels, Berlin, and Paris to enact new policies.

Reuters report.

A $1 trillion global emergency package to stabilize the euro unleashed a spectacular rally in world stocks on Monday but analysts said EU leaders had only bought time to tackle deep-seated fiscal problems.

Reuters story.

Rioting protestors and burning banks on the streets of Athens have clearly grabbed the limelight the over the past week. But from an investor standpoint, they have simply underlined the growing skepticism about whether the European Union can save the euro zone from a Greek default and spreading debt meltdown.

AlertNet story.

Defense Secretary Robert Gates told the U.S. military on Saturday it must rein in spending that he called out of sync with today's tough economic times, and said budget woes could be a factor in deciding whether to use force against Iran and others.

[...]

"I do think that as we look to the future, particularly for the next couple of years or so while we're in Iraq and Afghanistan, I think the Congress and the president would look long and hard at another military operation that would cost us $100 billion a year," Gates told reporters.