The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries' debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse. It will, at some point, become impossible for one of these countries to pay their debt, or for the ECB/EU/IMF to kick the can further down the road. Or, austerity measures won't be tolerated, and work-stoppages will break the camel's back. Goldman Sachs is in a corner, and their efforts to escape are getting ugly. Maybe they want to practice the Chinese model? But, that requires a Chinese police state. All we need now is someone to start building their military to increase their GDP... EDIT: Krugman yesterday: http://krugman.blogs.nytimes.com/2011/11/19/incredible-europ...