It's a problem of the EU's own making, of course: had they tried to design the Euro as a stable and solid currency for the whole region, they would have just re-branded the Deutschmark, and they certainly wouldn't have let Greece in. Indeed, they probably wouldn't have let Italy in. But no, the Euro was designed not as a currency but as a testament of political faith in the Union.
The problem is that even if Greece is bailed out (and since the UK provides 20% of the EU budget, you know that we will be doing a good deal of the bailing, Euro members or not), Italy looks similarly shaky, and is an awful lot larger. Greece's debt is a tiny and manageable 4% of the total government debt in Europe, while Italy's is a huge and potentially disastrous 23%. And as Laurence Copeland of Cardiff University Business School points out, 'the difficulty is that Italy's the Euro zone's third-largest economic power, [and] has a debt-to-GDP ratio similar to Greece's'.
Copeland thinks it could play out two ways in the UK, Germany and other countries who will be forced to bail out their irresponsible neighbours. Nationalism and anti-EU parties could rise; or voters might support the same profligacy that they have seen in Greece, thinking that everyone else can darn well bail us out for a change.
Either way, it's bad news for the Euro, and a source of instability that the world financial system, already punch drunk, will have trouble defending itself from. Only urgent action to remedy the core problem – government overspending and overborrowing – will keep us upright.