The possibility of a Greek debt default is looming over Europe as leaders prepare to try to hammer out a second rescue for the country at an EU summit next week.
Rioters took to the streets in Athens on Wednesday, highlighting the urgency of Greece's problems just days after Standard & Poor's downgraded the country's credit rating to make it the lowest-ranked in the world.
Finance ministers called emergency meetings in Brussels on Tuesday to discuss the situation ahead of further talks next week.
"The growing sense is that we are entering a highly unpredictable phase of this crisis, with markets starting to anticipate the implications of a messy default," said Tim Fox, the chief economist at Emirates NBD in Dubai.
Stock and bond prices have fallen dramatically as investors contemplate an impasse between the European Central Bank (ECB) and Germany over what to do about Greece. The country has more than Ä95 billion (Dh492.44bn) of debt due by the end of 2013 and needs further aid by next month to continue servicing its borrowings. The EU and IMF threw the country a Ä110bn lifeline in May last year.
The potential for further pain in Europe is not limited to Greece, however. Moody's Investors Service, another major global ratings agency, downgraded three large French banks this week. And in yet another sign of an impending crisis, Nout Wellink, an ECB governing council member, said yesterday the size of Europe's bailout fund should be doubled to Ä1.5 trillion.
"Everybody's kicking the can down the road of too much public and private debt," Nouriel Roubini, a New York University professor who in 2006 predicted the global financial crisis, told Bloomberg News. "The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest."