A couple of quotes from Greenlight's letter to shareholders:
It is hard to blame the current European leaders for their inability to solve a crisis that has no real solution. Even the very best options range from awful to awful, so no one should be surprised when the political choice is "None of the above. Let's put out a communiqué and hope that no one notices."Much to its chagrin, Germany doesn't have the option of walking away either. The recent huge influx of deposits into "safe" German banks only serves to exacerbate the problem. The German banks don't need the money, so they park it at the Bundesbank, which in turn lends it via the ECB back to the local banks that are losing deposits in Europe's periphery. Essentially, the bank runs also shift the credit risk of peripheral banks from the local depositors to the Germans. While the Germans kick and scream about not wanting to take on credit risk through Eurobonds, they are already taking on similar risk through the banking system.
Unfortunately, spot on.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.