High unemployment, lagging recovery, productive forces channeled into debt payments - this is Europe's economic situation in a nutshell.
The Eurozone is under immense pressure to solve the de facto insolvency of Greece, Portugal, Ireland, Cyprus, very possibly Spain and Italy, and enough to be a concern - France. It is doubtful Germany can deal with the sum of that pressure single-handedly.
As mentioned previously, admitting defeat and letting these countries fail would mean a crisis for the euro that could very well end its existence. Those invested in the currency would seek to sell and write off losses, plummeting the price of the euro and skyrocketing inflation. Ironically, it might give the needed monetary deflation to get the countries in question to their natural economic states, but the blow to Germany's economy would also be crippling. Not to mention, the Eurozone would disappear overnight and a programmatic currency to act as an interim unit of exchange before the previous national currencies can be sufficiently restored might not even have time to get off the ground. The main reason for that is, if the Eurozone collapses, the political project known as the European Union would end with it and the continent would be in its third set of painful political throes in a century.
To put it succinctly, this is the gravity of the matter, which rests on the shoulders of the tiny island in the eastern Mediterranean.