What was a disastrous future for the southern periphery of Europe is now being extended to the northern states as well. Germany is the main target of this exercise. Today's agreement to accept near worthless bank equity by the European banking stabilization fund is an admission of hopelessness.
No one yet is reducing the yawning deficits or recapitalizing the insolvent banks that plague Europe. That's off the table for now. So, European debt continues to explode off to infinity while the paper-shuffling politicians rearrange the names of the guarantors. In the end, it won't matter. Germany will suffer the same fate as Greece and for the same reason. They can't pay their bills.
The problem in Europe is one of solvency, not one of liquidity. These patch jobs only make the final outcome much more severe than it would be if the real problems were faced with candor.