Europe's problems are simple: every country in Europe -- there are no exceptions, not even Germany -- borrows to pay for promises that their own economy hasn't got the resources to pay for. The same is true in the US, but it hasn't become front burner yet. It will. Ultimately, you run out of people willing to loan you the money to pay for things that you otherwise can't afford.
It's not as if the US and Europe are borrowing to build bridges. That might represent a legitimate reason to borrow. Instead the indebtedness is a result of current funding needs that will only escalate over time. When does social security and medicare get less expensive? This is the heart of the European problem. They are not borrowing to fund long term investments, they are borrowing to fund the welfare state.
Put another way, they are borrowing for current consumption. The consumption being funded is part and parcel of the way of life in Europe, as it is in the US. There is no real difference. When your economy does not produce enough resources to fund it's obligations, then borrowing from somewhere, anywhere for a while will postpone the day of reckoning. But, not forever. Sooner or later bondholders realize you have no way to pay them.
So, what is the Obama solution. Float more debt. How? Who's going to buy it? Even if Germany were to relent and agree to underwrite the rest of Europe, Germany doesn't have the resources to do so. Once you have a debt that's not payable and you know that it not ever going to be payable, the jig is up. The jig is up. It's just a matter of time until the default process begins. That can either be an orderly process of "restructuring" or it can just be pure chaos.
If Greece returns to the Drachma, how does that help them? Who's buying Drachma based debt? And will Drachmas fund their social welfare agenda? Who's kidding who?
Economists are partly to blame for this fiasco because they have been negligent in pointing attention to unrealistic sovereign debt levels that exist in every western economy. In fact, they've encouraged these absurd debt levels by arguing that higher and higher government expenditures and higher and higher debt levels are good for economies. Read Paul Krugman if you want a taste of this reasoning. If your debt levels are growing so that you fund consumption by transfer payments to "entitled" people, it can't be good for the economy.
There is no serious economic research out there that suggests that this has any beneficial economic effects. Yet most academic economists have remained silent. Many are in the forefront of the clamoring for Germany to underwrite the Eurozone. But, that doesn't work either. Has anybody looked at Germany's numbers? There just isn't anyone left out there to buy bonds to fund other people's retirement at 60. It's over for that. This is not about European unity or a fiscal union or any other nonsense. The is about raw numbers.