Beginning of a new Crisis or an End to the 2year issue??Which route to take??

Beginning of a new Crisis or an End to the 2year issue??Which route to take??
As i write the entire world is in a state of unknowns what will happen next. US recession, AAA downgrades, European Debt Crisis, Gold Bubble etc.
Date:14th September 2011
Dax: 5166
Cac: 2894
Dow: 11105
Nifty: 4940

First and Foremost the sell off seen in the last 1-2 months was on account of the European debt and not in any way on account of a possible slowdown in the United States. Of course US will get hit if the issue in Europe goes out of control. . Even the S&P AAA downgrade fall was accentuated due to a sell off in Europe.

So the main Issue remains in Europe. We know about it from the last two years.
So can it get ugly?? Yes it is....But is it Manageable?? Yes A BIG YES....
At the heart of the issue lies Greece. Its a beautiful place having a debt of around 285 billion Euro and a population of 11 million (1.1crore)
French and German banks hold a size able chunk in Greek bonds and they have to be written of to the realisable value. If you go to see the Cac and the Dax you would notice that these banks have taken the hardest hit. On one hand a section of the stocks are trading at 2Year lows , prices closer to the post Lehman crisis. On the other hand there are other stocks which are trading closer to all time highs as well (Adidas :hit a high of 57euro on 15th july 2011)

What can be a possible solution??
1) Pure Bailout
2) Let Greek default
3)Euro bonds

A pure Bailout seems to be the best possible solution. Finland whose contribution was a mere 2% shook things up last week.
See France and Germany for once cant be too easy in dishing out capital to Greece otherwise tomorrow one shall find Portugal ,Italy and Spain at their doorsteps. If Greece wants a Airbus business jet make them settle for a Falcon2000.
Greece can be bailed out easily. Pros v/s Con of Bailing remain a debate internally.

Another possibility is to let Greece default. The way bond prices are moving, chances of a Greek default are possible. France has even acknowledged that its banks are ready to face the consequences.

The third option of Breaking up Europe and issue of Euro bonds seem very grim. If that were to happen it would raise Frances' interest costs by over 40billion a year. More logical to save the enemy today.

So where does all this leave India?? I continue to say that we are in a Bear market from last year (esp looking at small and mid cap valuations). Inflation is a big issue affecting us and that can change if oil prices correct further. Its heads i win, Tails i don't loose much as per Dhandao.
India consumes close to 3 million barrels of oil per day and if oil corrects 10% translates to a savings of 47,000Cr's+.

Best money (multifold 3x -4x) can be made in smaller cos with a Market cap of 100-2000Cr's for next 2Years.

Risks are known unlike Lehman so in my view this Greek animal can be tamed or killed. Depends on France and Germany. They wont screw greece if they get screwed themselves. A Possible solution will lead to fresh liquidity chasing the markets and in all likelihood 20% upside in case of a pure bailout. A managed default is priced in the CAC & DAX as of today.