Italy is very much to the forefront again - the government is hanging by a thread. Italian newspaper Repubblica is reporting that Silvio Berlusconi has agreed to resign by January in exchange for agreement from his coaltion partners on reform of pensions and government bureaucracy.Italy, which has €1.9 trillion (£1.65 trillion) of debt, will try to sell €10.5bn of government bonds today, even as it races to come up with a credible debt-reduction plan in time for today's summit in Brussels. Obviously if Italy is without a leader, or can't get agreement on debt reduction, it will make getting a final agreement at this afternoon's meeting all the harder - it is the eurozone's third-largest economy after all...
The International Monetary Fund is considering taking part in the bail-out fund via a special investment vehicle (SPIV), Reuters reported. To increase the firepower of the €440bn EFSF without actually putting more money into it, the SPIV (try not to laugh at the name) will be able to issue debt and use the money raised to buy the bonds of indebted nations in the secondary markets, or make loans to governments. The SPIV would be able to raise money from private investors and sovereign wealth funds, and the IMF could also contribute. Of course, when the IMF is involved, it means stakeholders countries taxpayers are on the hook because of the country's contribution to the fund.
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The Daily Telegraph's Benedict Brogan says David Cameron will be flying in to Brussels this afternoon, in time for the leaders' meeting at 4pm, and that talks are expected to go on all night. He will then be whisked away by his waiting plane to Australia, for the Commonwealth Heads of Government conference.
The PM may not be in Brussels too late, however - after Nicolas Sarkozy's angry reaction to Britain's contribution to Europe at Sunday's summit, the leaders of non-euro nations may not be asked to stick around.
09:01 Former British chancellor Norman Lamont has warned this morning of "great dangers" with the possibility of a haircut for Greece. He also claimed some countries would fail to ever become "fully competitive" in the future, telling BBC Radio 4's Today programme:
There's a very important aspect of this and that is something called credit default swaps - the insurance policies that are taken out to safeguard people, insure people, against default by sovereign authorities like Greece.
One of the dangers of the haircut that is being proposed is that a severe haircut will cause a credit event and will trigger credit default swaps and will therefore affect banks who hold those credit default swaps.
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I personally think the long-term future of the euro will be argued about for some time to come because the strains there are so immense I don't believe that the southern Mediterranean countries in the long run can ever really become fully competitive
The Dutch minority government might not be able to find a majority in parliament to approve the big eurozone reforms expected to be negotiated today in Brussels as both government and parliament during a six-hour long debate Tuesday refused to be specific about what would be acceptable.
Prime Minister Mark Rutte will not be able to count on the support of hard-right MP Geert Wilders and his Party of Freedom (PVV), the government's usual parliamentary partner, who made it clear it would oppose any new rescue package.
Instead, it is going to take the support of the Labour Party (PvdA) to tip the balance.
Blog home European debt crisis D-day live• Investors nervous as Europe's leaders meet for crucial summit
• Italy's government teeters on the brink
• German parliament votes on EFSF changes
• Today's agenda
• Blogging now: @JuliaKollewe
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The flag of the European Union flies in front of the German parliament building in Berlin, Germany Photograph: Kay Nietfeld/EPA
11.26am: Back to the German parliament. Merkel is setting out measures needed to prevent the eurozone debt crisis spreading. First, recapitalisation of European banks. Second, a "firewall" - she used the English word - to stop Greek debt problems spreading. "Every country needs to do its homework."
11.24am: This just in from David Gow in Brussels.
The Commission confirms the Berlusconi letter has not yet arrived "but we are confident we will receive the letter from the Italian authorities before the end of the day". Pressed by Italian journos, the spokesman says Rome must set out concrete and detailed measures to restore confidence in financial stability of the eurozone. Also: "We need a deal tonight. What we expect is a credible political answer to the key questions on the table".
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