For if bondholders know they will be among the first victims burned in bailouts in 2013, they may suspect a singeing even before then. This will impel them to start shedding the bonds of any nation with deficit and debt problems, which will deepen those deficit and debt problems.

While the EU-IMF bailout fund is now sufficiently flush to handle a Portugal, Madrid has an economy twice the size of Greece, Ireland and Portugal combined. If Spain is forced into a bailout, and Italy, which has a huge debt, totters, a European panic is on—and a global panic may not be far behind.

Moreover, the Germans, who will have to cough up more euros for any new fund to rescue the governments and banks of nations that are neither as conscientious nor work as hard as they, are fed up with bailing out the La Dolce Vita nations of Club Med. If Merkel does not mirror the mood of her people, her CDU could find itself out in the cold.

These bailouts come with painful conditions. The governments rescued must cut deficits and debt, which translates into cuts in public salaries and services affecting the middle classes, students, the vulnerable and the poor.

Yet though the time of austerity has only just begun, there have been mass protests in Dublin, riots in France, anarchist assaults on Tory Party headquarters in London and lethal violence in Athens. And while austerity may be necessary to restore fiscal and financial health, austerity alone cannot restore prosperity.

That will take years.

Which returns us to the character of the people of Europe upon whom these stringencies are being imposed.

How long will Greeks, Irish, Portuguese, Spanish, British, French and others, facing a savaging of social safety nets, accept austerity, without searching for populist candidates and parties who will default on the debt and let banks go under?

Why not break free of the discipline of the euro, restore the old national currency, devalue and stiff the creditors? Argentina did it.

If one or two of these countries, even the smaller ones, default, America may not be directly affected, as we own little of the debt of these countries. But what if the big banks of Europe face wipeouts of capital and equity due to defaults?

Are America’s banks so well insulated from Europe’s that their end of the boat can sink and ours stay afloat? The Credit Anstalt crisis of 1931 leapt from Austria to Germany to Japan to Britain to the United States.

How long will Germans play the “good Europeans” and use their savings and a solid credit rating earned through years of sacrifice to bail out deadbeat nations whose welfare states are more lavish than their own? After constant repetition, the Three Musketeers’ slogan of “all for one, and one for all” can get rather tiresome.

Having seen how the Asian crisis of the 1990s leapt from country to country and continent to continent, it is hard to believe the European debt-default crisis stops with Ireland and Greece.

As Dubya once said, “Boys, this looks like a five-spiral crash.”