The crisis in Europe

1. I've heard it claimed the lion's share of the fiscal crisis in most of the "peripheral" states comes from the burden of backing up insolvent financial systems. This is certainly true of Ireland and Spain; for the others it seems less straightforward.
2. It seems to be one worry that if Greece is officially recognized as having "defaulted" instead of "renegotiating" its debt, this would set off trigger insurance many investors bought on their Greek debt--but which the counterparties are in no position to pay out. The resulting chain-reaction of losses would more or less bring the continent's financial system to a halt.
3. In the last couple days there have been reports of a half-a-billion euros in what are in effect loans to finance internal European trade imbalances, currently on the balance sheet of the German central bank. That money is, for all practical purposes, gone.
4. The ECB refuses to monetize sovereign debt but has for all practical purposes agreed to fund every private bank on the continent for 3 years at 1%. Already the loans have surpassed a trillion euros. Yes, obviously this is a way, on a macro-economic level, to counteract fiscal austerity by ensuring the banks can lend at reasonable interest rates. But in return for doing European leaders the favor of not failing and so throwing the entire economy into chaos, the banks get the right to essentially print money in the form of any return above 1% they can get from their cheap, guaranteed financing.