There are a number of ways to think about Europe's troubles

a) An irresponsible buying spree by the GIPS countries, induced by lower interest rates, due to the Euro was financed by Germany (Sinn)

b) Germany's excess savings sloshed into GIPS countries who were now flush and of course started buying 

c) It's the balance of payments, stupid! (also known as doctrine of immaculate transfer, see Davis)  

Paul Krugman provides the Davis quote and the data. 

It is normal to discuss the sovereign debt problem by focusing on the sustainability of public debt in the peripheral economies. But it can be more informative to view it as a balance of payments problem. Taken together, the four most troubled nations (Italy, Spain, Portugal and Greece) have a combined current account deficit of $183 billion. Most of this deficit is accounted for by the public sector deficits of these countries, since their private sectors are now roughly in financial balance. Offsetting these deficits, Germany has a current account surplus of $182 billion, or about 5 per cent of its GDP.

It’s also worth noting that we’re not talking about imbalances that have been going on forever.The internal imbalances of Europe are a recent development, coinciding with and almost surely caused in large part by the creation of the euro itself (GIPS is Greece, Italy, Portugal, Spain):

And what Davies’s post drives home is that implicitly at least European leaders went in for the doctrine of immaculate transfer — in effect, they wanted to believe that the huge payments imbalances could be ended without major changes in relative prices.