Peter Boone and Simon Johnson have threshed out 4 possible scenarios for what the endgame might be as far as the Euro and debtor nations.:
First, as officials hope, the IMF bailouts for Greece and Ireland may work - by stopping the panic and reassuring the investors that there will be enough growth to make even those debt burdens sustainable. This seems most unlikely, particularly given what we have seen of the IMF package for Ireland so far.
In this scenario, everyone can continue to stay inside the eurozone. The debt profiles of Greece and Ireland would remain vulnerable, as would slow growth in Portugal and whatever Spanish banks are hiding in their so-called "stress tests." Germany agrees to foot an open ended bill because its leadership becomes scared of the consequences. The ECB buys a lot of bonds, one way or another.
Second, there is the current market consensus that a package of IMF-European Union support for Portugal and perhaps Spain would truly stabilize the situation. This consensus is fragile - and perhaps more wishful thinking than anything else - but likely to motivate official efforts in the week ahead. But this is what we call the Maginot Line Illusion, i.e., an idea that ignores the potential for trouble to jump to other potentially weaker eurozone countries, such as Italy, France or Belgium.
In this scenario, Greece probably leaves the eurozone and restructures its debt. The Germans say "Greece should never have been admitted; this was the original and only mistake." Ireland stays in the eurozone but many of its citizens emigrate. There could be significant grants from Germany and even from outside the eurozone, depending on how much fear spreads around the globe.
You get the picture. None of them are very palatable - even for nations like Germany and France whose economies are still strong.
The bottom line: big changes are coming in Europe. Is America ready for them?