As I write, Europe's leaders are still meeting in Brussels, wrestling for the nth time with a debt-restructuring scheme for Greece and, much more important, a plan to address the wider European sovereign-debt crisis. It is important to understand that these are very different issues.
If the Greek state is insolvent (admittedly, not everybody thinks it is), then dealing with its debts is a question of apportioning unavoidable losses among creditors and taxpayers (domestic and EU-wide). Obviously, in political terms, that is an extremely difficult task. But states such as Italy and Spain, to say nothing of EU governments as a group, are plainly solvent (for now). In their case, the question of apportioning losses need not arise if the crisis of confidence can be arrested--and it could be, rather easily, if only EU governments would stop deluding themselves.
The WSJ reports:
The [EU leaders'] summit follows a vote in the German parliament, which approved further changes to the role of the European Financial Stability Facility, the euro zone's rescue fund, but sought to limit the European Central Bank's role in bailout policies, including ending its purchases of euro-zone bonds of troubled member nations once the EFSF is in place.
German Chancellor Angela Merkel said in an address to the parliament that governments must ensure that the debt crisis doesn't spread from Greece to other countries.
Interesting, because limiting the role of the ECB as a buyer of eurozone bonds is a good way to ensure that the crisis does spread from Greece to other countries.