Germany, an exporting nation, kept the Euro artificially low to make exports more competitive. The (un)intended consequence? A property bubble in the periphery (PIIGS) an area that was traditionally a low real estate cost area. Now the bubble has burst, many of these countrie's debt to gdp is no worse than Japan's or the USA's... yet the little countries need to be sent thru the wringer of austerity. The US, by the way, will have a worse problem. Unlike the US, many of these nations just have sovereign debt... no municipal, county or state debts that are in jeopardy. (please, someone correct me if I'm wrong)
Why do they have to bail them out? They can just let them default. The PIGS can adjust via massive asset price and wage deflation, rather than the usual currency debasement.
An overnight, rapid collapse in asset prices and wages sounds good in economic theory to bring about a supply/demand equilibrium, but would likely cause civil unrest. The Germans are aware of this, and would hate nothing more than their European pipe dream of peace and happiness going up in flames in the streets of Club Med. Remember that Angela Merkel is a student of Helmut Kohl, a key engineer or the European Union and EUR zone.
Conclusions in the recent ECB working paper on EMU exit might be relevant (author is the ECB legal counsel, Phoebus Athanassiou). It's quite interesting, actually, and can be found here: http://www.ecb.int/pub/pdf/scplps/ecblwp10.pdf Generally speaking, it seems that the ECB has taken on the role the IMF normally played in earlier EM crises, swooping in, imposing severe fiscal restraints and austerity. Arguably, as demonstrated by the latest episode, the policy actually seems to work, in the long run, despite causing a whole lot of pain.
The main reason the PIIGS join the EU was for economic reason, i.e. the EU money. The EU should now bend over and pay up for these members - including backing up loans from the IMF. No wonder some countries looked at it twice and became partial member.