Dan Drezner rounds up some evidence in favor of the former view, specifically the price of Italian bonds. Joshua Goldstein defends the latter:
I doubt any big change will come out of the crisis. Rather the Europeans will once again muddle through, following the path of least resistance. The Greeks will grumble but sign on to the bailout plan, and their inept prime minister will resign. The euro zone will stay intact. No big reforms in fiscal policy will take effect. And the wonder-that-is-Europe will keep doing what it does — keeping hundreds of millions of people peaceful and prosperous.
My own view is that the stakes keep getting higher. There will come a point a which only a transformed and more politically unified EU will be able to stay ahead of the markets. And then the Germans will face the moment they have long dreaded: do we own this thing or leave it? And the German elite will try to own it, because an unraveling Europe means the end to everything the country has stood for for the past half century.
The question is: what will the German people decide? Or do they not matter?
The Dish 