This discussion is moving in the right direction towards the tough choices that need to be made to enact meaningful grown-up policies.
A troubling question is how we will find the political will to do the right things. Recall that the Irish government proposed strict austerity measures to cut their enormous deficit and reign in spending a few months ago. The Euro rallied as it looked like Ireland was going to start doing the right things and reverse the debt-spiral that was engulfing them. Now the Irish austerity plan is being cited by angry throngs as the cause of their current crisis (rather than its treatment) and the government is likely to step down amid a call for new elections in 2011. The Euro is weakening on the news as what seemed like a painful but necessary course back to solvency a few months ago, is now once again in question.
All around the world, massive spending cuts are needed, but also bondholders need to take losses in order to reset the system. The misguided pattern of tax-payers bailing out bondholders who made bad bets must end.