The Current Euro Situation.

The European situation is growing stranger by the day, while most people dont seem to think about it, the truth us that the peripheral Euro states are headed for a car crash whether they like it or not and here are the reasons why.
Firstly, the Germans are essentially terrified by the current situation. At the moment, the EFSM (the European 'bailout fund') is being contributed to by all members except greece, I believe. However, once a country requests a bailout, then they no longer have to put money towards the EFSM. What this means is that if Greece, Spain and Italy go into Bailout, then between them, Germany and France will be left holding the bag for 66% of the total value of the EFSM, which is currently valued at 60 Billion.
As a result, the Germans want gold as collateral for their bailouts to Greece and Spain. Now Gold is a tricky thing. If you give another country your gold reserves, then essentially, you have also given them your sovereignty. History shows that a countries gold reserves are the central credit basis that all other transactions that country makes are based upon.
Incidentally, if you are interested in how the EFSM works, you can have a look at the very confusing report from the OECD here. Please note that it was written in 2011, so the differences between the text and the reality may have widened somewhat.. =) However, you can also check out the EU's explanation here.
Now, this is speculation, but I believe what is happening is this.
Not everyone is aware that Goldman Sachs hid 1Billion euro of Greece's debt so they would appear to be within financial limitations to join the EU. In other words, they joined under false pretences. The Germans, quite rightly, feel probably shocked by this, since as a result of this fraud, Greece is now in the situation it is in now.
Now none of the southern European countries are going to _want_ to give up their financial sovereignty (remember, the EU is a financial union, not a fiscal union, or to put it in english, we all use the same currency, but all the states are allow to set their own economic policies).
Now of course, this had lead to big problems, essentially, large banks have been raiding the bonds of peripheral EU countries and making a killing. In a strange twist that is often true of the market, if everyone didnt think that greece was on the edge, then their borrowing costs would not be so high, therefore, they would not be on the edge..=)
The only solution, as far I and others can see is the Eurobond. Like the USA, the EU has to have a single bond, so that peripheral countries cannot be raided and have their interest rates forced up. However, if this happens, Germany's (and probably France as well) will have their ratings cut because of the extra debt they have to take on, regardless of whether this debt is 'sterilised' or not, which will lead to higher borrowing costs. However, this may not be such a problem for Germany. Another little known fact is that German bonds are actually at _negative_ rates now, which means that you have to pay them to hold on to your money, since people are so scared to put it in the bonds of any other country.
If the Eurobond is made, then the EU will have to become a fiscal union, which means that the financial policies of the PIIGS will be decided by Germany (and France) the populations of these countries are not going to like this, but I suspect that once things get bad enough, they will beg for the eurobond. After all, things are not really bad yet, people still have food, for instance. But once the price rises from all the droughts happening in the world filter into the world food prices, there are likely to be food riots and other serious disturbances in the PIIGS. Politicians are by nature cowardly creatures and once the civil disturbances start, I suspect they will tell the people anything to get them to accept the eurobond, (including trying really really hard not to tell the people that Germany is getting all their gold.)
After all, a country without a gold reserve is not really a country. Just because we can create 'money' out of thin air, when the debtors come calling, that have to be paid with something more than paper of electrons and gold historically, is that thing.

This is one of the reasons why the value of gold is rising at the rate that it is. Unlike paper or electrons, which work fine when everything is in a boom, when the shit hits the fan, everyone wants the gold, because unlike contracts, swaps, derivatives, or ETF's, gold has intrinsic value.