Ultimately, there is only one nation in Europe that investors trust - Germany. And they will only support the Euro and treat the southern European nations (now called Club Med) as credit-worthy if Germany backs up the debt. The current $1 trillion fund is a palliative that will not satisfy the market once the larger obligations of Spain ($1.6 trillion) and Italy ($2 trillion) come into question.
Germany will have to buy the southern European debts and assume national responsibility for their repayment. But while her leaders may be willing to do it, I doubt that her voters will acquiesce. German nationalism - the force that dominated Europe for one hundred years - will not take kindly to paying the bills for their profligate neighbors to the south.
While conservatives are quick to blame the social welfare policies of Greece and the other Club Med nations for their deficits, the fact is that this increasing level of debt is what inevitably happens when a nation is not allowed to use monetary policy to counter economic downturns. With the German-dominated European Central Bank in charge of interest rates, Club Med nations did not have the zero interest option the Fed embraced in this country. So the only way out of recession was through fiscal policy which led to deficits that are out of control and a debt that cannot be repaid.
But unless Germany steps up and assumes responsibility for these debts - something its voters likely will not permit - the Euro is dead. Some have spoken about creating a two tier Euro, one backed by Germany and a softer currency that would not be. But this is merely a euphemism for the end of the single currency for the continent.
Ultimately, those who wanted to broaden the European Union will have trumped those who sought to deepen it and blocked the path to total political unity, at least on a continent-wide basis.
This does not mean that trade barriers will return to Europe and it does not preclude deeper ties among the well-behaved nations of northern Europe. But it does mean that the United States of Europe will not come to be.
Those who value freedom should heave a sigh of relief at this prospect.