As the financial system continues its course towards an inevitable collapse, it's important to understand why is failing, and why it is very unlikely that there is nothing governments can do to avoid it.
The genesis of the problem is the link between nations' economic policies and the international banking system, which has basically become utterly corrupt. Therefore, the socioeconomic well-being of entire nations has become dependent on a financial system based on corrupt investment banks.
Cities, counties, municipalities, countries, sell bonds to investors, or borrow money from banks in order to supplement their tax revenues, and keep governmental functions running properly. They also set up investment accounts, like pension funds, in these financial institutions.
So in essence, there is a money and wealth flow from people, cities, states, countries, etc., that accumulates at these financial institution.
Obviously, this system is extremely important to the world economies, that it needs to be properly regulated in order to avoid fraud.
However, because these banks had so much influence and power, they were able to basically buy off the entire political class in the United States and Europe. So it became an incestuous relationship, where the political class and the financial institutions "got in bed with each other" (figuratively, and in some cases, literally).
The political class then became corrupted by accepting money, favors, influence, for themselves, their families, and friends, and in exchange they opened the doors of the nations' coffers to be looted by the financial class. They did this by tearing down the regulatory infrastructure that provided protection against fraud and abuse in the financial system.
This allowed a very small group of (easily identifiable) people to loot the international financial system and enrich themselves to unimaginable levels. Trillions of dollars (Euros) were stolen--for all intents and purposes.
And so here were are today... All the major financial institutions (the ones that lend money to counties, cities, states, countries) are basically insolvent. They are lying about their "books." There are many financial instruments "floating" around, including tens of trillions of dollars in "credit default swaps" obligation, derivatives, an God-knows what else.
A lot of this stuff, because it's all linked to very sophisticated and complicated computer algorithms, has basically ran away from the control of any-one individual, institution, bank, head of state.
And so the issue is not only one of "finances" but also of "political will."
As difficult as it may be, for countries like Greece, Portugal, Spain, Italy, and others, the right thing to do would be to recognize that the international financial system is broken (mainly because of corruption and thievery), and opt out off it--by declaring that they will no honor their foreign debt, and defaulting.
Then they should come up with a emergency plan to institute sensible (national) monetary policy focused on stabilizing their societies. Printing money, of course would be part of it. Honoring pension funds, funding national infrastructure projects, etc. Of course, care would have to be taken to avoid run-away inflation, and other potential risks.
But because these politicians have chosen to believe in the current international economic orthodoxy, and because of some sort of economic dogma, and yes, because of the fact that they (the political class) has been basically bought off by the criminal banks, it is unlikely that any of them will make the decision to unlink their economies from the broken and fraudulent international financial system.
And finally, the other challenge is that between the countries involved you have the "predatory loan" pushers like Germany and the United States, and the "victims" of predatory lending, like Spain, Iceland, Ireland, Portugal.
So politically-speaking, their interests are not aligned. Germany is pressured by its population not to provide any more loans to the so-called PIGS (the derogatory meaning is not missed), and Greece's population is pressuring the government not to accept increasingly draconian austerity measures--demanded by lenders (i.e., German banks, the IMF).
And this scenario describes the anatomy of the inevitable international financial collapse. The reason it is inevitable is because the banks have been looted by an easily-identifiable group of people, and because they are lying about the condition of their books.
Another reason is because there is no honor, ethics, or principled leadership among the political class of these countries--US, Germany, France, UK, Greece, Spain, Portugal. The political class (in power) can be characterized, basically, as sycophants of the financial system (because they have been bought off with money, favors, and influence-peddling).
So that leaves the populations of these countries with a choice to make. Do they let the criminal banksters and sycophantic political class dictate their future, or do they revolt and remove the criminals from power.
Those are the choices... Unless the political class gets "religion" and do the right thing--and soon.