Below is a paper from GMO analyzing the European bailout. Here are the key takeaways:
1. In low growth world, it would take a miracle for Greece to escape without negotiating a large cut in the principal of its debt;
2. Defaults can be limited to a few small countries, and perhaps only to Greece, while the rest can string things along until a somewhat more normal global economic growth pattern resumes later this decade;
3. The probable need to recapitalize commercial banks to cover defaults casts a long shadow on the process; and,
4. The eurozone is likely to need more resources than it has gathered so far (i.e. more money printing on the case of the ECB).