The answer is simple, split the Euro into a Mark area, Germany, Belgium, Holland, Finland and Austria and a Euro area comprising the PIGS and other dodgy European economies. The Euro will then devalue big time boosting the PIGS economies but as their debt will be denominated in Euro they will repaying their debts in a devalued currency.
On the other side the Mark area currency will appreciate from the old Euro rate reducing their debt burden big time. Who loses? Well the PIGS bondholders but this way its perfectly legal and can trigger no nasty CDS inducing credit events ie defaults. Who gains? Holders of bunds who can repay in devalued Euro that they can buy on the open market. You don't have to redenominate their old Euro debt. Again all strictly kosher.
The observant amongst you will notice France is absent from my list. Its a tricky problem. Economically it belongs in the Mark area which will be politically dominated even more by Germany. A difficult problem for Sarky. Does he want to be the biggest fish in the Euro pond or the number 2 fish in the Mark pond. A choice Sarky wants to avoid but as AEP writing in today's business DT a choice that is unavoidable.
You end up with two workable currency areas rather than what we have now, one unworkable area. Will it happen? I doubt it. Much humble pie would need to be eaten by the Eurocrats and they don't do humble pie or common sense either. Like Napoleon they will march on until the onset of the coming freezing economic winter forces a retreat. For students of history that great French military genius Napoleon crossed into Russia with an army of 500,000 and exited with an army of 10,000. The Eurozone, the latter day Grande Armee, might well meet a similar fate unless common sense prevails but pride is a deadly sin with deadly consequences for others not of course the cosseted Eurocrats.
Merkel warns of another conflict in Europe that only the EU can prevent. She has got it the wrong way round. The coming meltdown is an EU creation from start to finish. The hubristic EU is the cause not the cure.