If they don't, the euro would really collapse....and then the rest of the PIGS will collapse. It would be devastating to the entire EU. It is similar in a sense when the US bailed out the banks. Allegedly saved a total financial collapse, and saved the Dollar. Thots?
Germany would be smart to pull out of the EU and bring back the DEM. Of course that would mean the politicians would have to eat Humble Pie and admit that the EZ was nothing more than a dream.
Yes, they need to save Greece, but it's going to be very hard, if not impossible. Germans don't want to dump their hard-earned money into Greece, or Portugal or Spain... which is exactly the problem that Milton Friedman predicted. He said that the euro won't survive it's first economic crisis. I think he's going to be right. The one thing about Europe is that they are all essentially frenemies. Centuries of hating on each other, and now they are expected to bail each other out? It won't happen. Imagine if it were up to Texas to bail out California? It wouldn't happen, but luckily (or maybe unluckily) we have the Federal Reserve to take that power from any single country. Now so for Europe though. They need 16 countries to agree to bail out Greece, and the richest one is waffling. The only question is, what happens after that? How low will the euro go before it collapses? What will happen to all the euro-denominated bonds and contracts? If people start pulling out of the euro, will it be orderly or disorderly? These are the things that I don't know, but I wish I did so that I could trade on it!