Daniel Gros over at VOXEU has run the numbers and is arguing that it is actually foreign debt rather than public debt that is driving the solvency turmoil in the Euro zone. Meanwhile Paolo Manasse is adding to the chorus pointing out the likeihood of a Greek default.
There are three ways this can end (assuming the monetary union doesn't break up):
- Roll over existing debts for the forseeable future (at a more sustainable cost of borrowing)
- Restructure the debts, or
- Introduce Euro bonds
The ball is clearly in Germany's court. Eurointelligence provides a useful overview of the current thinking in that country.