One aspect of the long-drawn out sage of the Greek debt problem is the fact that the saturation coverage the problem receives by the 24-hour Media channels that exist now may actually make the problem more difficult to solve. Similar problems in the past (Latinamerica for example) were discreetly handled behind (largely) closed doors, markets reacted much more slowly and a rational solution could be worked out by those involved most closely - without being pushed around by self-interested speculation. There is no bank, and hardly a country, that can withstand a run on the bank as we see in the case of Greek sovereign debt. During the credit crunch 2008-09 quite a number of banks got into problems because the tail (the thinly-traded market in CDS's that was driven by speculative positioning) was allowed to wag the dog. Now the same happens to spreads in sovereign debt - and bank spreads are drawn into the same downward spiral.
Solving the Greek problem in a similar fashion should not pose an all-too-big problem: If the country is insolvent it should just do what any rational company does - file for bankruptcy protection and submit a workout plan. The plan has to include all stakeholders - lenders (national and international) as well as those with a claim on the budget. A haircut has to involve all these constituencies to the same degree, 20 or 30 per cent or whatever is required in the light of careful analysis. This would include salaries paid by the government, pensions, transfer payments. At one stroke an this quasi-internal devaluation would restore competitiveness internationally, as everyone gets treated equally there would not be endless fights among different parts of the population. A temporay surcharge on high incomes could smooth inequalities.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.