Merkel believes there is no alternative. But there is an alternative -- a restructuring of Greece's debt or a default where the holders of Greek bonds suffer the fate of the holders of bonds from Lehman Brothers and General Motors.
Inevitably, this is what is going to happen.
For how long will Greeks work longer, retire later and live on smaller pensions, so holders of Greek bonds can get their interest payments right on time?
The EU and IMF may, with the bailout of Greece, kick this can up the road. But the crisis will return. For the nations of Europe have made commitments beyond their capacity to keep, given their growing debts and aging populations.
And America is not all that far behind.
While the federal deficit is not 14 percent of GDP, it was 10 percent in 2009 and may reach 11 percent in 2010. Trillion-dollar deficits are projected through the decade, bringing the public debt -- held by citizens, companies, foreign governments and sovereign wealth funds -- close to 100 percent of GDP.
And the unfunded liabilities of Social Security, Medicare and federal pensions rival those of Western Europe.
States like California and New York, larger than Greece, look a lot like Greece. Were it not for the scores of billions dished out to them by Obama's stimulus, some of these states would have come close to the brink New York City went over in 1975.
Many of these states are today laying off teachers, letting felons out of prison, and looking hard at the salaries and pensions of civil servants. While the temptation is great for Washington to bail them out again, the United States government itself has now begun to attract the concerned notice of holders of U.S. debt.
That we are witnessing Oswald Spengler's "Decline of the West" seems undeniable.
La Dolce Vita is coming to an end. The ever-expanding European and American welfare states of the 20th century will contract in the 21st. Some have already begun to shrink. A time of austerity is at hand.
Indeed, what is about to be tested is democracy itself.
Can democracies that attracted universal applause in the golden years of rising expectations impose upon their citizens the enduring and painful sacrifices necessary in a time of retrenchment?
We are about to find out.