Interesting that most of the stories in the press casting doubts on euro agreement are merely speculations largely originating in the U.S. media, not in the European press. They have to be a little more careful over there due to their liable laws.
I have no idea how it will work out but I'm pretty sure Bear Stearns owned a bunch of mortgage stuff that was no longer possible to value and sell. I assume your position that Italian, Spanish and Irish bonds are toxic. If that is the case then I would ask what sort of yields are being paid on debt maturing in Dec. 2012? Without the support of the ECB they could become toxic but I am aware of no reputable source arguing that they are so. Here is a white paper from a very conservative firm arguing why this is so for at least several years.
I don't know how MF will shake out and the European positions are likely going to generate some small losses but sovereign debt of Italy/Spain/Ireland is not the equivalent of subprime mortgages and to focus strictly on the sovereign debt issue is a mistake. I'm just wondering how it impacts other contracts and relationships. If traders can do business with a firm that doesn't have the same leverage in southern European sovereigns why wouldn't they? For a price they might but it would be a pretty big price.
A larger firm can easily absorb these risks so the debt isn't going to prevent a sale, the question I have is what are the costs to unwind all the other positions that they have and integrate the businesses elsewhere? It looks possible but to do it so quickly is tough and that is what might kill MF shareholders. MF Board showed great integrity in moving the earnings release date up and getting the news out there but the stupidity in getting into positions that large is astounding. Even if it would have worked out I think I would have said it was a stupid risk to take.