Market volatility continues as EU leaders debate bailout

Talks continue over how to prevent debt crisis contagion

The prospect of a Greek debt default continues to fuel market volatility as leaders in Europe debate beefing up the eurozone bailout fund and seek ways to prevent the crisis from spreading into Spain and Italy. After hopes of a credible plan to ensure the continued delivery of loans to the beleaguered government in Athens rose earlier this week, disagreements over the burden private lenders should take in the endeavour emerged on Wednesday. Many economic analysts are predicting Greece will eventually default on its debt, regardless of what eurozone leaders end up doing. They say the Greek economy is shrinking while its debt is increasing, and it will soon have no choice but to neglect paying it off. On Thursday, the German parliament will hold a crucial vote on whether it will support the creation of a larger bailout fund. Finland already approved that notion in a vote Wednesday. Greece needs an additional 8 billion euros by mid-October in order to remain solvent.

The Globe and Mail