How much longer for the Euro?

Looks like Greece's prime minister has to resign in order for them to accept the latest package.  I still don't think it's going to make a difference.  Sure, it includes some debt write-downs (definitely a good thing), but it also includes a bunch of immediate austerity (short-term, definitely not a good thing).  For me, the key would be a commitment on the ECB's part to support the Euro-periphery's funding needs until their economies recover (an indefinite bond-buying program, for example).  But, while Mario Draghi is infinitely more competent than Jean-Claude Trichet, he still doesn't seem to be willing to give the peripheral countries the kind of commitment they need to get them through the crisis.

While it's kind of hard to see the Europeans letting the Euro go, they are also committed to not doing enough to keep the Euro-zone together.  Eventually, this will come to a head-- Greeks will get tired of counterproductive austerity, and the Euro will reach a point of crisis.  Either the ECB will have to provide open-ended financing and delay austerity until the economy can recover, or Greece will have to shut down its banking sector, default on its debts, and exit the Euro-zone.  That will inevitably cause massive bank runs-- assets on Greek banks' books are Euro-denominated, while the drachma would inevitably be worth substantially less than the Euro.  Depending on the global financial system's exposure to Greek (and other peripheral European) debt, it could also have knock-on effects whose scale could range anywhere from seriously disruptive to catastrophic.

I tend to think that a Greek default would cause a cascading effect, at the least to Spain, Italy, and Portugal, but potentially even further.  In that case, I think we'd be facing a global Lehman moment.  Lehman's disorderly collapse in 2008 shook global financial markets so much that the Congress was immediately scared into passing TARP and bailing out the rest of the big American banks, while the Fed flooded the US financial system with trillions of dollars of emergency liquidity to prevent an imminent failure.  A failure of any one of Greece, Spain, Italy or Portugal, never mind all four, would be a few orders of magnitude worse.  And the US alone probably wouldn't be equipped to rescue them.  I think at that point we'd need a concentrated global effort to avert global economic collapse, with not just Germany and France, but also China and the US pitching in funds to stabilize the global financial system.  Now, the ECB could choke off that kind of disaster by taking aggressive steps to create higher inflation in the Euro-zone and buy up peripheral Euro-zone debt, but it's looking more and more like the ECB is a useless institution, which in turn could well mean that the global economy would have to be on the verge of collapse before it was induced to act.