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Why Europe's debt crisis is still spreading

European credibility seems to be the issue. Investors are increasingly edgy over whether EU policymakers can agree on how to ease the debt crisis.

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President of the European Central Bank Jean-Claude Trichet listens to a journalist's question during a news conference after a council meeting in Frankfurt, central Germany, Thursday, Aug. 4. The European Central Bank decided to keep the main interest rate unchanged at 1.5 percent.

Mario Vedder/dapd/AP

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Europe’s economy remained in critical, but stable condition Thursday, as risks mounted of a double-dip recession in big economies like Italy and Spain that could compound woes elsewhere, including the United States.

Markets grew ever more skeptical that European policymakers will be able to agree on measures to stem the crisis in time, as investors lose faith in the region’s convoluted decision-making process.

Indeed, crisis talks are ongoing. Political and financial leaders are even delaying their sacred August vacations. And the European Union’s executive head, EU Commission President José Manuel Durao Barroso, released a letter Thursday addressed to country leaders illustrating just how desperate times are.

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