Macroeconomic and Microeconomics Function

At a press conference on Thursday, Jean-Claude Trichet, the president of the European Central Bank, sought to break the fever in the markets by saying that the aid program proposed by the International Monetary Fund and the European Union was a "very, very serious commitment."

The statement helped bring yields on 10-year Greek government bonds down from their peak for the day, to 7.35 percent, but it was not enough to turn around the mood of pessimism that contributed to a further fall in Greek and other European stocks.

"Time is running out," said a senior official in the Greek government who spoke on condition of anonymity because of the delicacy of the issue. "The market is testing Europe's resolve."

To a large extent, this latest bout of Euro-stasis is a function of Germany's view that it is not the market contagion from the Greek drama that presents the greatest risk to Europe.

Instead, Berlin is far more worried, as Mr. Jen puts it, about the supposed "contagion of bad behavior" in other countries like Portugal and Spain that might follow if Greece were to become the beneficiary of a bailout on relatively generous terms.

"This should be easy to do; Greece is only 3 percent of Europe's G.D.P.," said Paul De Grauwe, an economist based in Brussels who advises the president of the European Commission, José Manuel Barroso. "But this is no longer a financial issue. It is about politics and nationalism, and it is a real setback for those who believed in a united Europe."

There are unmistakable signs that individuals and corporations are withdrawing funds from Greek banks, although the sums involved do not yet constitute a bank run.

Still, weakened Greek banks, increasingly shut out of the capital markets, have become largely dependent on the European Central Bank and have turned to the Greek government to release more money from a previously established rescue fund.

The Greek government is coming close to giving up on private investors as well. While Athens said it would go ahead with its short-term borrowing auctions this week, the planned fund-raising trip this month by Greece's finance minister, George Papaconstantinou, to tap Wall Street investors is unlikely to happen as long as Greek borrowing costs remain high, said a person who was briefed on his plans.

Greece's hope is that it will be able to borrow as much as 30 billion euros ($40 billion) from Europe and the I.M.F. at a rate of about 4 percent or so, which is consistent with the terms offered by the fund to other indebted countries.

Such a view, however, assumes that the I.M.F. would be the lead actor in the rescue, as it was in countries like Hungary and Latvia that are not in the euro zone. In all the vagueness of the European Union's agreement with the I.M.F. on Greece, the one point of clarity was that Brussels