Austerity is not the answer. Austerity just means lower standards of living in the future and political chaos. Does anyone think things look bright for Cyprus, Greece, Portugal, Spain or Italy? These unpayable debts should have been moved into default negotiations. That is the only answer. Increasing sovereign debt in all of these countries is madness and brings Germany and France into the same boat.
Bureaucrats and naive politicians (think Obama) always believe that there is some simple "political" solution to every problem. There isn't. They are wrong. The only way to deal with too much debt is to reduce it. Period. Nothing else helps.
The ECB is on the wrong track. It is long past time for "workouts," but better late than never.
Otherwise the center-right and center-left political parties will be completely discredited and radical alternatives, already emerging, will move into prominence.
Politicians never learn. The only way to a higher standard living is free enterprise. Having the government responsible for old age security and health is a huge mistake. Government can play a role as a backstop, but if government is the major provider, the only outcome will be waste and mismanagement and improper funding, which is what we are observing.
Obama's biggest problem is that he thinks of everything in terms of "justice," which, to him, means equalizing the outcomes of the economic process. If you do that, the economy will grind to a halt. That was the experiment in Russia, China and Cuba. It doesn't work. The sluggish and stagnant growth of the American economy is living testament to the outcomes that the Obama economic policies will lead to. Things will get worse.
What is needed is an economic environment where individuals are free to pursue their dreams and achieve success or failure on their own terms. You can't guarantee everyone success. That just means that everyone fails.