If you’ve ever seen a cyclist struck by a car, you know there is a surreal moment before the meeting of automobile and bicycle when your mind won’t accept the reality of what your instincts tell you is about to happen.

The news out of Europe Wednesday creates a similar feeling.

Three people died in a fire set at an Athens bank by people protesting Greece’s planned austerity measures. Moody’s Investors Services said it is reviewing Portugal’s debt for a possible downgrade. An index that measures global stock prices was down almost 2 per cent this morning, wiping out this year’s gain. The euro is trading at its lowest level in 14 months.

The 130-billion euro financial rescue of Greece is starting to look like a levy that is about to give way. Alex Weber, a member of the European Central Bank’s policy council, told an audience in Stuttgart, Germany that the desire to stop fiscal contagion in Europe doesn’t justify using any means necessary to keep debt-strapped countries afloat, creating uncertainty about Europe’s resolve to contain the situation.

“The legitimate aim of preventing contagion effects in Europe’s financial system doesn’t justify using every means,” Mr. Weber said, according to an account of his remarks by Bloomberg News. “Measures that damage the fundamental principles of the currency union and the trust of the people would be mistaken and more expensive for the economy in the longer term.”

It is still possible that the stress in Europe will ease.

When a demonstrator was killed by police at the Group of Eight summit in Genoa, Italy in 2001, the anti-globalization protests of that era lost some of their fire. Inadvertent deaths in Athens could have the same cooling effect in Greece, which would ease some of investors’ anxiety about whether the Greek government has the political will to legislate the spending cuts demanded by European countries and the International Monetary Fund as a condition of the bailout. Actual passage of those measures, along with legislative approval of the rescue in Germany and elsewhere, might also reassure the bond traders.

Unfortunately, the worst-case scenario of a broader fiscal calamity in Europe appears almost as likely as the best-case scenario of the Greek bailout working, buying time for countries such as Spain, Portugal and Ireland to get their finances in order.

The worst-case scenario would change the dynamic of the Toronto Group of 20 summit, putting the self-appointed overseer of the world economy in a position it might not yet be ready for.

Simon Johnson, the Massachusetts Institute of Technology professor and former chief economist at the IMF, is predicting the worst-case scenario. To stop the contagion, he argues that the G20 will have to arrange a bailout for European countries of as much as $1-trillion (US).

At the moment, it’s hard to imagine that the G20 is cohesive enough to agree to such a plan. As Finance Minister Jim Flaherty said earlier this week, the group couldn’t even agree on a statement of support for the Greek rescue package. Pledging to spend 2 per cent of gross domestic product on their own economies is one thing. Convincing countries such as Argentina and Indonesia of the necessity of extending a lifeline to countries such as Greece and Spain is quite something else.

Still, the struggles of Greece and the risk of contagion is adding urgency to an exercise that G20 officials would prefer remain academic for now.

The grandest promise the G20 leaders made in Pittsburgh last year was to create a “framework for strong, sustainable and balanced growth” that “lays out the policies and the way we act together to generate” that kind of economic expansion.

As a debate at the Centre for International Governance Innovation at the think tank’s Waterloo, Ont. headquarters on Tuesday showed, this framework remains very much a work in progress.

For example, there was a serious and legitimate question posed about what does “strong” growth look like? Is the goal to replicate the 5 per cent rate of global growth that was achieved in the years ahead of the crisis? In a world where the Greek economy is set to contract 4 per cent while Chinese gross domestic product expands at an annual rate in excess of 10 per cent, balance appears a long way off. Questions of these kinds assume that co-operation among 19 diverse countries and the European Union is achievable, or even desirable. One participant at the CIGI conference argued that it is dishonest for G20 leaders to promise a sustainable economic future when independent central banks will be largely responsible for achieving that outcome.

Canada is committed to the task. Finance Minister Jim Flaherty, Bank of Canada Governor Mark Carney and their deputies argue forcefully for the optimistic view. They say an attempt to co-ordinate economic policies can at worst harmlessly flop. The potential reward justifies the attempt.

The Toronto summit will mark an important milestone in the effort to facilitate a calm economic future. The IMF is currently assessing each G20 country’s economic projections and policy intentions to create a model of where those policies would take the global economy. The idea is for leaders to take the results in Toronto and adjust their economic programs accordingly to avoid creating instability. The hope is that heads of state, gathered around a table, will forge a political agreement to reduce debt, loosen currency policies and boost productivity.

Greece will provide a vivid example of how one country’s policy mistakes can create problems for everyone else. The “framework,” provided it receives serious political backing, could become an important check on selfish, beggar-thy-neighbor policy making.

Whether it will be enough to calm the immediate storm gathering in Europe is another matter.