The reason why the bailout of Greece is still in question is the moral hazard it would create throughout the rest of southern Europe. And the price tag is steep.

(Bloomberg) -- Europe may need to stump up as much as 320 billion euros ($441 billion) if it decides to bail out Greece because it would open the door to rescuing other countries in financial distress, according to BNP Paribas.
“To come up with a bailout plan that would be reasonably certain of success, it would have to cover all the most likely candidates, and it would have to be big,” said Paul Mortimer- Lee, global head of market economics at BNP in London. “Size matters when you are trying to scare off speculators and to comfort nervy bondholders.”
The CHART OF THE DAY shows BNP’s estimates of the aid packages that would be required for Greece, Portugal, Spain and Ireland. Mortimer-Lee used 20 percent of gross domestic product as a rule of thumb, based on recent International Monetary Fund packages.

Meanwhile the credit markets of Europe are getting nervous.

The Markit iTraxx Crossover index measuring yields on lower-grade debt has jumped by almost 130 basis points since mid-January to 514, while the main index of investment grade bonds has jumped by a third to 93. "This is the biggest move since the financial crisis in early 2009, said Gavan Nolan, Markit's credit analyst.

The steepening of the yield curve on subprime debt in Europe will eventually force a real resolution on the Greece question. Tough talk will only put this off for so long.