In the case of Greece, the debt burden has clearly become unsustainable.
Bondholders have been offered a "voluntary" restructuring by which they would accept lower interest rates and delayed or decreased repayments; but no other arrangements have been made for a possible default or for defection from the eurozone.
These two deficiencies - no concessional rates for Italy or Spain and no preparation for a possible default and defection from the eurozone by Greece - have cast a heavy shadow of doubt both on the government bonds of other deficit countries and on the banking system of the eurozone, which is loaded with those bonds.
As a stopgap measure the European Central Bank (ECB) stepped into the breach by buying Spanish and Italian bonds in the market. But that is not a viable solution.
The ECB had done the same thing for Greece, but that did not stop the Greek debt from becoming unsustainable.
If Italy, with its debt at 108 percent of GDP and growth of less than 1 percent, had to pay risk premiums of 3 percent or more to borrow money, its debt would also become unsustainable.
The ECB's earlier decision to buy Greek bonds had been highly controversial; Axel Weber, the ECB's German board member, resigned from the board in protest.
The intervention did blur the line between monetary and fiscal policy, but a central bank is supposed to do whatever is necessary to preserve the financial system.
That is particularly true in the absence of a fiscal authority.
Subsequently, the controversy led the ECB to adamantly oppose a restructuring of Greek debt-by which, among other measures, the time for repayment would be extended-turning the ECB from a savior of the system into an obstructionist force.
The ECB has prevailed: the EFSF took over the risk of possible insolvency of the Greek bonds from the ECB.
Image: European Union's flag flies as the temple of Parthenon atop of the Acropolis hill is seen, background, in Athens, Wednesday on September 14, 2011.
This column by George Soros first appeared in the New York Review of Books and then on Reuters. The opinions expressed are his own.