The current discussion of Western European sovereign debt problems are ridiculous. So, too, are the discussions of American sovereign debt problems (state, local and federal). If you spend a multiple of your income every year, would it matter, long run, how much you owed on day one? Eventually, you would go broke regardless of the initial level of debt. In fact, if anyone bails you out now, you will just take a little longer to go broke and the debt will be much, much larger when you eventually do go under.
There are not enough assets in the Eurozone to prop up Greece, forget about Portugal, Ireland, Italy and Spain. For that matter, there is no real hope for ultimately paying off the national debts of Germany, France and the UK. They all spend too much relative to their income. Ditto for the US.
The Great Experiment, promising future old folks a guaranteed income and free or inexpensive health care cannot work. It's simply a matter of numbers. Debt can postpone the bankruptcy of these systems, but, in time, they will fail. The problem is that someone needs to be setting aside acorns for the winter...no one is doing that in the US and western countries. The irony is that Asians don't have the same worry (except Japan which has the same habits as the US and Western Europe). Asian countries don't have safety (sic) nets; what they have is high personal savings rates, which is, frankly, all you need to provide for retirement and old age health care. You really don't need anything else but that. But, that is precisely what the US and Europe lack.
These continual discussions of bailouts and debt restructuring will continue until they can't continue any longer. Anyone foolish enough to buy the sovereign debt of these countries deserves their fate. Even US treasuries cannot hide from the cold hard numbers. There is no serious political activity to halt the steady march to bankruptcy in every major western country, including the US.
Is this bad, necessarily? No, not really. As long as the productive resources of the economy are in play and incentives remain in place. The problem is that governments will seek to find ways out of their problem through higher taxes and broken promises. That changes the game. Bankruptcy is much better, though that, too, involves broken promises.
The only way to provide for income and health care in old age is to save during the working and productive years. If a society doesn't do that, then there is nothing around to consume when the old folks need it. Is there anything else worth saying about this topic? If you want health costs to quit spiraling out of control, then get government out of the health care business entirely, except in the provision of "charity" hospitals and medical care for the truly indigent (which is a very tiny fraction of any modern industrialized country). Free market health care would provide choice, low prices, and excellent care. Any other solution condemns the citizenry to long lines and poor health care.