My visceral reaction to Europe's $1 billion bail-out plan was that somewhere George Soros or his wannabe successors are smiling.
 
Soros made a name for himself betting against the British Pound (an investment strategy worth revisiting today given that the UK resembles Greece in more ways than not).  Bets against insolvent European countries and the increasingly fragile Euro will make a new round of hedge fund managers wealthy and infamous.

All the Europeans have done is assemble an impressive pile of money that will be used to bail-out member countries as they exhaust their ability to finance unsustainable debt through private market alternatives.

In the short term some degree of stability has returned as the immediate threat of Greece's default is delayed.  Over the longer term, though, the chance of catastrophic failure within the broader EU increases.  An incremental $1 billion in debt will accrue to already over-leveraged members and the bail-out will act to slow or prevent vital behavioral reforms necessary to preserve the solvency of these imperiled countries.
 
At some point either:

1. The responsible will tire of subsidizing the irresponsible
2. Bail-out money will run out
3. The irresponsible will decide that they prefer the option of inflating their way out of debt obligations (like the Federal Reserve) and abandon the Euro, or
4. The financial situations of member countries will erode to the point where no credible lender will buy into the notion that an EU bail-out will perpetuate solvency

There has been a weak attempt to attribute Greece's troubles to the global economic downturn.  This contention in preposterous.
 
While the timing of the current crisis is certainly the result of the global downturn, the behavior which created the fundamental problem of unsustainable debt has existed for decades.   The crisis would have eventually catalyzed.  In reality, by accelerating a recognition of unsustainable social programs financed via Ponzi tactics, the global downturn has down Europe a favor.
 
The ultimate economic damage has been reduced because the ability to accumulate even greater sums of debt has been curtailed.  Even better, EU component countries have been provided with the opportunity to change unsustainable behavior.  A decade from now, had over-leveraged countries collapsed solely under the weight of debt, they might not have had an opportunity at salvation.
 
Sadly the Europeans appear intent on wasting their good fortune. 
 
A bail-out may only work if the underlying problem which created the solvency crisis is resolved.  European social programs and welfare states are not sustainable.  They may be financed successfully for several decades through accumulation of debt as long as demographic trends are favorable.  But when enough debt and unfunded pension liabilities have been accumulated the system fails.  That failure is accelerated when the elderly or pensioners come to represent a material component of the population. 
 
Even as the Greek Tragedy plays out, in the United States the Obama Administration is attempting to adopt the very social programs and obligations that are being exposed as unsustainable, unaffordable and insolvent in Europe.  At least when FDR introduced Social Security he had the benefit of favorable demographics and a clean slate.
 
Obama is attempting to nationalize health care while the country is already approaching insolvency, demographic trends have no chance of sustaining the program and similar social systems have resulted in catastrophic failure.
 
On our present course it will not be long before the same financiers who abandoned Greece develop a similar distain for American IOUs.