Things have move on a little since my article of 3rd October.
Word on the street is that the apparent indecision in the EU masks a decision that has been made: it has apparently been concluded that the Greek government is incapable of reducing its budget deficit unless it no longer has the money available to it to spend, so the next tranche of "loan" of €8bn will not be made. Instead Greece will be allowed to default by renouncing its sovereign debt to 40% of face value, which coincidentally is the price at which their debt is trading on the open market, and any further financial assistance given to Greece will be in the form of emergency transitional relief. Things are about to get a great deal worse for people in Greece.
The delays are apparently now to allow all reasonable effort to be put into ensuring that the banking system does not collapse once the formal announcement of the default is made (the default will force the banks to crystalise the losses on their balance sheets), by recapitalising the banks and by restructuring one of the most vulnerable, Dexia. Whether Greek domestic banks are capable of being saved (and any EFSF effort or money is to be put into this) is not clear, but it is banks in other parts of the Eurozone, and in particular French banks, which are now the main targets of this recapitalisation. The remaining battles within the Eurozone are about whether the recapitalisation of French banks is to be a French taxpayer responsibility, or an EFSF responsibility to which other Eurozone countries, and in particular Germany, will contribute.
The EU/ECB appear to have gone on the path of short term pain for (possible) long term gain, but the question is whether Greek default can be managed without causing contagion to Portugal, Italy and Spain. In any event, little attention seems to have been paid to David Cameron's preaching to the Eurozone, quite reasonably given that the UK is not a member.
Meanwhile the UK government and Bank of England have gone on the opposite path of short term gain for (possible) long term pain, by starting a new round of quantitative easing. Quantitative easing comprises in effect a compulsory taking of a proportion of all UK denominated liquidated assets, such as banks accounts, cash ISAs and bonds, for the relief of debt in the UK by inflation. It puts more money in the economy but punishes the prudent, which is not sustainable as a long term model. It is particularly bad for people's savings in pension funds and for annuity rates because of the reduction in bond yields. The point that may be in danger of being overlooked is that the economy needs savings, investment and trust as well as short-term liquidity in order to prosper in the long term.
So two very different approaches to how to deal with sovereign and private debt. Time will tell which is the more correct. I would not necessary bet on this being the UK government rather than the German government.