ROME, Italy - July 12, 2011 - Italy moved with alarming speed from the fringe of the European Union’s financial crisis to its very center as efforts to prevent the debt contagion from spreading beyond Greece, Ireland and Portugal failed, even threatening to engulf the United States.

Plunging prices for trading in Italian debt presented Brussels with a nightmare scenario: The potential bailout of the third-largest economy in the eurozone could be unaffordable and could result in the destruction of the common currency.

The spread to Italy is disturbing evidence that even the largest economies, none of which seemed to share any of the worst economic traits of Greece, are not immune from investors’ fears that debt loads are simply becoming too big to be paid. Waning growth in the western world is only intensifying the belief that debt defaults may be inevitable, a potentially catastrophic scenario that would slaughter the banks and cut off the credit required to keep companies functioning.

Markets fell around the world on Monday, hitting virtually every stock index and commodity. Oil lost 1%, an indication that the markets think the debt crisis will crimp global growth. The euro took a beating, losing 1.5% against the dollar. The failure among EU finance ministers to agree on new bailout terms for Greece added to the tension.