Will the Greeks Open Pandora's Box?

From Bloomberg:
European leaders may have opened a “Pandora’s box” of unintended consequences by raising the possibility of Greece leaving the euro, according to Morgan Stanley.
Responding to Greek Premier George Papandreou’s plan to hold a referendum on the nation’s second bailout, Angela Merkel and Nicolas Sarkozy last week said the question must be framed as a choice between staying in the euro and submitting to the bailout, or exiting the single currency. Papandreou canceled the vote amid growing pressure on him to resign.
The possibility of leaving the euro has been “so far a taboo in European political circles,” Joachim Fels, Morgan Stanley’s chief global economist in London, wrote in a note to clients today. “European governments may have set in motion a sequence of events which could potentially lead to runs on sovereigns and banks in peripheral countries that make everything we have seen so far in this crisis look benign.”
Jacob Funk Kirkegaard, research fellow at the Peterson Institute for International Economics in Washington, said in a posting on the institute’s website. “The euro area now has been equipped with a political and institutional nuclear weapon to use against recalcitrant members and seemingly has the will to use it.
My view:

The Euro is a prison complete with torturers for those "recalcitrant" members like Greece, Italy, Portugal and Spain who are not responding so quickly with balanced budgets. 

In fact, with current debt levels in these countries, it is likely that they are completely unable to provide balance budgets as the debt has grown so immensely that it is impossible to repay.

They will default on at least part of the debt sooner or later.

You could say the the EU has a policy that "the beatings will continue until morale improves".

Democracy has been diminished, even banished from the voter on the street given the resistance by the EU to the Greek referendum proposal.

Where does this leave us?

F. Hayek warned us about giving government open access to the public purse and the abuses that would follow.  Now we see the poison fruits of socialism's never ending spending spree.

The bond market will put an end to this madness sooner rather than later.

The question is whether it will be Greece or Italy that opens Pandora's Box of monetary horrors?