If I was Angela Merkel, I'd be taking Nouriel Roubini's advice and bailing out on the Greek bail out. I'd also be looking at how to get out of the EU. Forget whether or not the Greeks leave the EU, I want out now. I'd be husbanding my resources to salvage my banks as the Greek and Spanish debt defaults wash over them and rob the German citizens of their life savings.
The only other possibile solution would be for the European Central Bank (ECB) to start printing unbacked Euros and covering Greek, Spanish and Portugese debt. That would prevent bank failures, but the resulting debasement of the currency would effectively rob the Germans of much of their savings as well. My bet is that they'll go this way because it would take too much effort to escape the EU.
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