The European Central Bank.

A full US and European recovery from the global economic crisis seems unlikely any time soon, after persistent fears over debt-ridden countries in the euro zone and higher than expected US jobless claims sent global markets into a tailspin yesterday. European shares continued to fall sharply today as all these issues continue to spook investors.

The BBC reported that several countries in the euro zone are suffering severe problems with a ballooning deficit, including Spain, Portugal, and of course, Greece. Meanwhile, European Union leaders and European Commission officials have offered only conflicting messages about whether or not a bailout is imminent or even possible: While there is deep seated concern about what might happen to the whole of the euro zone should one country default on its debt, there are also legal issues surrounding an EU bailout of a member country, as well as a dangerous precedent.

And all this fear is leading to speculation that the euro zone may even break up, the BBC reported. The Telegraph editorialised on Wednesday that Greece is about to suffer the consequences of being part of the euro zone – and congratulated the British government for its “wisdom” in staying outside the euro.

Yesterday, while the markets tumbled, The New York Times’s Floyd Norris wrote that EU countries should be thinking about whether they “hang together” or “hang separately”, in the paraphrased words of Benjamin Franklin. “How Europe chooses to deal with the problems of the countries on the edge, among them Greece, Spain, Portugal and Ireland, may determine the future political shape of Europe, and the future of the euro itself,” he wrote.

“If the euro problem does turn into a crisis, however, 2010 could turn out to be the year of the currency fights,” he concludes. “Currency adjustments are no panacea. Competitive devaluations were common during the Depression, and did no good for the world economy. But some flexibility is needed when economic circumstances change. In some critical parts of the world economy, that flexibility is not there now.”

The Economist wrote yesterday that an EU-led bailout of Greece would in truth, help no one – but if Greece were to approach the International Monetary Fund for help, a major, euro zone wide crisis could be avoided. “It is true that the fund’s role in a single-currency zone would be to help avert a sovereign-debt crisis, not to offer classical balance-of-payments support. But its expertise in drawing up austerity measures and reform programmes would be just as valuable. It may be embarrassing for a euro member to need the fund’s assistance, just as it was for Britain in 1976. But the Greeks should be ready to turn to the IMF before they lumber themselves with an even worse fate.”