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First, Greek workers could redeem themselves through suffering, accepting large wage cuts that make Greece competitive enough to add jobs again.
Second, the European Central Bank could engage in much more expansionary policy, among other things buying lots of government debt, and accepting — indeed welcoming — the resulting inflation; this would make adjustment in Greece and other troubled euro-zone nations much easier.
Or third, Berlin could become to Athens what Washington is to Sacramento — that is, fiscally stronger European governments could offer their weaker neighbors enough aid to make the crisis bearable.

Krugman - A money too far



All institutions, including the European Central Bank, would use the "full range of means available to ensure the stability of the euro area", they said in a statement.
"We will defend the euro whatever it takes. We have several instruments at our disposal and we will use them," Mr Barroso told a news conference afterwards.
He declined to give any details of the plans, which will be presented to the finance ministers of all 27 EU member states at a meeting on Sunday, but said it would be done under "existing financial possibilities" in the budget.
The BBC's Jonny Dymond in Brussels says Greece's bail-out is requiring a lot more money than was suggested just a few weeks ago.
The financial assistance being offered is entirely without precedent - the hope is that it will stop the fears of default spreading from one indebted European country to another, our correspondent says.

BBC News - 'Serious situation'



But what is palpably clear is that €110bn bailout of Greece has been a flop, if it was supposed to persuade investors that Greece would be able to honour its obligations.
And many will be deeply concerned that instead of listening to what markets are saying, the German chancellor Angela Merkel today said investors were simply wrong - and that she and her fellow European government heads were determined to win in what she sees as a battle with markets.

Robert Peston - 'Will the next government...'



LONDON (MarketWatch) -- Shhhhh.

That must have been the message sent out to the European Central Bank governing council members, since they didn't even discuss purchasing government bonds, if you are to believe the testimony of ECB President Jean-Claude Trichet on Thursday.
Jacques Cailloux, an economist at the Royal Bank of Scotland, earlier referred to the possibility of buying bonds as the "nuclear option."
The ECB left Europe's key interest rate at 1%, as markets awaited President Jean-Claude Trichet's comments on the euro zone's debt crisis on Thursday.
Nuclear or not, there are very good reasons why, even in this sovereign debt crisis, the ECB should hold off from launching them.
For one, while a declining euro is good for European exporters, the attached volatility is not, and were the ECB to start buying government bonds, the currency would tank even further.
It's also of questionable legality, though most have come to the conclusion that the ECB could buy national bonds in the secondary market even if they are forbidden from buying them directly from governments.
The other point is that while the ECB can talk until it's blue in the face about being independent, there are limits to the extent it can antagonize Germany, which is furious already with the Greek bailout as well as the ECB move this week to junk the collateral rules for Greek banks.

'Shhhhh...'