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Little, it seems, will convince the markets that Greece is a safe bet. Investors have been jostling the country since the start of the year, raising the cost of Greek debt while forcing the euro down against the dollar. Not even the Greek government's austerity measures or a long-delayed $60 billion rescue package has been able to quell the market jitters. When credit-rating agency Standard & Poor's downgraded Greek debt to junk-bond status on Tuesday, the move sent the markets into a new tailspin. And now, as European Union officials scramble to assure investors that Greece is on the right track, the focus has moved to the euro: Can the single currency be saved before rapacious speculators tear the euro zone apart?

For the moment, at least, the markets have delivered a damning verdict on the efforts to salvage Greece. The interest rate that investors will charge the Greek government to borrow much-needed money on the open market hit 11.3% for 10-year Greek bonds on Wednesday — an all-time high for a euro-zone member. The bailout that Greek Prime Minister George Papandreou asked for last week — with some $40 billion in low-interest loans coming from the euro zone and $20 billion from the International Monetary Fund (IMF) — is already seen as deficient.

How much will it take to rescue the Greek economy? Piero Ghezzi, an economist at Barclays Capital in London, told investors in a briefing note that the magic amount might be $140 billion. German MP Juergen Trittin, head of the Green Party, said it could be as much as $160 billion. And Goldman Sachs' chief European economist, Erik Nielsen, calculated a three-year package worth about $200 billion. Others go further and raise the prospect of default, or as it is more gently termed, debt restructuring.

The E.U. is attempting to stamp out such talk. European Commission President José Manuel Barroso said on Wednesday, "There is no doubt that Greece's needs will be met in time." E.U. President Herman Van Rompuy insisted that euro-zone governments were committed to supporting Greece. And the head of the European Central Bank, Jean-Claude Trichet, said a default was "out of the question."

In Athens, short selling — the practice of selling shares that are predicted to go down so they can be bought back cheaply — has been banned for two months. And the 16 euro-zone leaders will hold an emergency summit on May 10 to activate their share of the $60 billion bailout.

But outside the E.U., officials are more guarded. IMF head Dominique Strauss-Kahn warned on Wednesday that every day lost in resolving the crisis risks spreading the "consequences far away." Angel Gurria, head of the Organization for Economic Co-operation and Development, said the crisis was spreading "like Ebola" and that Europe needed to act immediately to protect the stability of the financial markets. "It's not a question of the danger of contagion; contagion has already happened," Gurria said.

Indeed, investors are turning their attention to other vulnerable euro-zone economies, and Standard & Poor's has downgraded both Spain and Portugal in the past two days. On Wednesday morning, the Lisbon stock exchange plunged by more than 6%. "Markets are running scared following fears of further contagion in the euro zone," said Ben Potter, an analyst at IG Markets in London, in a memo. Portugal's Prime Minister, José Sócrates, spoke of a "speculative attack on the euro and Portuguese debt," but met with the head of the main opposition during the day, before they jointly announced plans to bring forward some austerity measures that had been scheduled for 2011.

Once again, the key to the recovery operation is Germany. German Chancellor Angela Merkel says that unless there is a "sustainable, credible deficit-cutting plan on the table," she won't release funds. "You have to economize, you have to become fair, you have to be honest; if not, nobody can help you," she warned on Tuesday.

Picking up the tab for Greece was always going to be unpopular with German voters, and Merkel is facing pivotal regional elections next month. Several key German politicians have echoed the press in suggesting that Greece is the author of its debt mess and should be left to hang on its own rather than drag down the rest of the euro zone. Merkel said on Wednesday that much of the blame for the crisis should be placed on the European politicians who allowed Greece into the euro zone in the first place.

But if Merkel's reticence is politically understandable, it appears to have only exacerbated Greece's financial woes. The long back and forth about whether and how to implement the rescue package has in fact precipitated the market anxiety the Germans said they wanted to avoid all along. Alessandro Leipold, a former director of the IMF's European Department, says "meandering strategy and poor communication" has undermined the bailout. "The cacophony coming out of European capitals has destroyed market confidence," he tells TIME.

In Greece, the uncertainty has been greeted with strikes and street protests — making it even harder for the government to sell its austerity measures to the markets. "The markets have doubts that Greece can consolidate its finances," says Jakob von Weizsacker, an analyst at Bruegel, a Brussels-based economics think tank. "We are in uncharted territory."

It's a troubling time for Greece and the euro, with few signs of a turnaround. Many Cassandras warned of this day, but it's not over yet for this Greek debt drama.

• Leo Cendrowicz / Brussels
• With Greece's debt crisis spreading to other parts of Europe, economists are warning that the $60 billion rescue package isn't enough