Jonahsworm,First, the Greeks, to put it simply, cannot pay and...

Jonahsworm,

First, the Greeks, to put it simply, cannot pay and everybody knows that, including a certain number of Germans for whom there is no point in extending this farce, which may be politically good for Merkel as prodigality at the eyes of most people on the streets must, of course, be punished.

Second, austerity is not going to work, isn’t going to convince the bond markets that countries in trouble will soon be fine, let alone cut interest rates sufficiently to make contractionary policies expansionary. It is a self-defeating exercise. It will hurt their economies more than it helps the short-term budget picture. You contract the economy through government cuts and in response the government receipts fall and in response to that what you do? You further contract the economy through more government cuts. You just can do that if the ECB is out there easing the money as the bank of England is doing, that is, showing some willingness to let inflation run a bit high for an extended period. If inflation runs in Germany at 3% and at 1% in Spain then after 10 years the advantage that the Germans currently enjoy over the Spaniards in terms of efficiency would be gone.

Third, the Greeks cannot also export, they need to implement micro economic reforms and they not only need time for that but also to have to deal with the fact that when you implement reforms output initially falls and when output initially falls government receipts also fall.
But that is not the end of the story, with everybody in Europe going for austerity at the same time then who is going to import Greek, Portuguese or Italian goods?

Yes, Greece, Spain, Italy, Portugal and Ireland need to control their public budgets but austerity everywhere at the same time and tight money is not going to help.

I think that Martin Wolf has a good summary of what this means:

To put it bluntly, the single currency will come to stand for wage falls, debt deflation and prolonged economic slumps. Can this stand, however big the costs of a break-up?

The answer maybe no.

I don't know but if the current policy does not change then for sure that at a certain point in time leaving the euro, no matter the costs, it will become the least painful option not only for the Greeks but also for Italy, Spain, Portugal, etc.

Europe from North to South has a common heritage and the EU was based on that. Incidentally Europe is now a days home to a large Muslim population, so much so that due to demographic dynamics there are concerns that soon the natives of Europe will be a minority in their home countries.

http://www.telegraph.co.uk/news/worldnews/europe/5994047/Muslim-Europe-the-demographic-time-bomb-transforming-our-continent.html

By the way, according to the Morgenthau Plan cocooned by Britain and the USA Germany was supposed to be transformed into a large agricultural and pastoral country but due to the cold war they quickly changed their minds and did not only went for debt forgiveness but also for a massive grants program called the Marshall Plan.

http://en.wikipedia.org/wiki/Morgenthau_Plan

In short, the current plan for a Federal European nation is in danger of being destroyed due to a lack of leadership. The euro has flaws that its founders knew about, but they thought that in time of crises those flaws would cause politicians to gain impetus for the elimination of such flaws by opting for further integration. Unfortunately that is not happening.

You are right, the holder generation with whom I tend to in part identify myself with is gone.