The first article below is by a private Swiss bank named Pictet.  It did a great job of sorting out all the key facts and showing where we are likely to head in Europe.  This is a high level summary that really helps you see the forest instead of getting lost in the trees.  Bond vigilantes are not going to let Europe kick the can down the road.

The Eurozone has two options:

1. Continue the current course advocated by Germany which is heading Europe towards a depression  – see point 11 in their outline where Germany’s current plan is similar to the route that led towards the Depression of the 1930s, or;
2. Accept the reality and do something about it.  The authors believe the ECB will print.  The issue is how much damage is done first.  They believe that “things are going to get worse before European authorities decide to wheel out their heavy artillery”.

Without wholesale “socialization” of euro member debt, the current situation is likely to move towards a break-up of the euro.  They believe that Germany will allow the ECB to print a lot of money at some point to buy the eurozone time to create a new monetary union that will include more fiscal integration.  Germany wants and needs adequate controls to insure that the countries remaining in the Eurozone comply with their austerity and budget rules.

A recession will hit home this winter which will increase PIIG deficits, despite aggressive austerity measures.

http://www.zerohedge.com/news/decision-time-europe-definitive-presentation-future-or-lack-thereof-eurozone

The second article explains where we are heading if the ECB does not print the money needed to bail out Italy and the other PIIGS.  Today, Italian, Spanish and French 10 year bond yields ran up a lot.  Something needs to happen very soon.

What is happening in Italy, France, and Spain today is what happened to Greece, Italy and Portugal initially.  Eventually their interest rates were driven up to such high levels that made it impossible for them to borrow the money they needed to run their governments and roll over their debt. The EU had to bail all of them out.  The EU doesn’t have enough money to also bail out Italy, France and Spain.  It is unlikely Germany will let this happen, but it helps remind us of why the upside (until something major changes in Europe) is not enough given the major downside risk because of Europe.  This is why we are largely on the sidelines for now.

http://seekingalpha.com/article/308081-italian-default-scenarios

This is pretty complex stuff for those of you who have not had the time to invest in reading a lot of these articles.  I would be happy to try to give you the readers digest version.  Just give me a call.