European Debt Crisis Widens

At Los Angeles Times, "Financial Markets Fear New Threat to Eurozone," and at New York Times, "Euro Fears Spread to Italy as the Debt Crisis Deepens":

Also, at Telegraph UK, "Debt Crisis: While Rome Burns, the Eurozone Fiddles":

Italy on Wednesday became the first major economy to require an international bail-out as its debts hit “totally unsustainable levels”.

The country's escalating crisis prompted questions about whether European leaders had sufficient will or financial firepower to rescue it.

The interest rate at which the Italian government borrows on the international bond markets hit seven per cent – the point at which the smaller eurozone economies of Ireland, Portugal and Greece had to be rescued.

Italy, the world’s eighth largest economy, has more than £1.5 trillion worth of debt, which has prompted speculation from some world leaders that it is too big to rescue.

Silvio Berlusconi’s pledge to resign as prime minister failed to stem the financial turmoil, and mixed messages on how the eurozone would respond to the crisis added to uncertainty in the markets.

Angela Merkel, the German chancellor, called for deeper European integration and a new “breakthrough” treaty that would give the EU greater fiscal powers to stop member states from slipping into dangerous levels of debt.

Oh boy, that's not good.

See Reuters as well, "French and Germans Explore Idea of Smaller Euro Zone."