The German bond failure was due to failing confidence in the Euro curency: not confidence in Germany. The IMF "is ready to help Europe", who estimate they need one trillion for the EFSF bail-out fund to restore market confidence in the Euro currency and in European bonds. It is always difficult to estimate a Euro price to buy market confidence. Sentiment towards the Euro currency drives European bond prices of all Euro-nations. The joint central bank action announced on Wednesday 30 Nov is intended to shore up European bank liquidity. Although that provides essential support for European credit markets, it does not solve the underlying problem which is that too many European countries have borrowed too much money: more than Europe has been able to muster so far to cover potential bail-outs. That joint central bank action can not solve the sovereign debt problem. The sovereign debts have destroyed confidence in the Euro currency as a whole, for fear that the Euro will be restructured. The unknowability of future currency restructurings creates immense risk, which deters economic activity denominated in that currency, hence recession.
Pan-European fiscal discipline needs to be achieved to restore confidence, but that discipline can not be achieved within a reasonable time frame unless the Euro is restructured. It will take a long time for even a handful of Euro nations to reach suitable fiscal agreements, and more importantly to prove that this time around those in any new Euro currency will actually adhere to their agreed fiscal limits. That may require constitutional, political and legislative changes to nations, which will take time, if at all achievable. If only some Euro-nations can reach fiscal agreement then the Euro will need to be restructured to implement that agreement. If the Euro is not to be restructured, then every member will need to agree upon new fiscal controls, and create the perception that this time they will honour their agreements. Therefore, no matter which outcome the market perceives likely, the Euro is under great threat of either restructure with unknowable consequences, or a crisis in confidence, and that is why confidence in the Euro is so low.