From Naked Capitalism we see the introduction of the Berlin Club. If the IMF says the nations fail in their restructuring, the Berlin Club would come in and usurp sovereignty. Yes, the IMF is located in Washington DC, but it is one of the devil's trio along with the Bank of International Settlements and the World Bank.
What would happen is that sovereignty would be sacrificed and the nations, mainly the PIIGS, would be subject to grave restrictions on the treasuries of the countries.
This plan no doubt has been in the works for a long time, probably at the formation of the Eurozone. The nations would have foreign governments come in and control major parts of the treasuries of these countries.
PIIGS listen! Do what Iceland did and place a large middle finger into the face of Merkel and the IMF. This is something that may move the PIIGS to war, or perhaps they could opt out of the European union. They really need to hold onto their sovereignty. Because if they don't, the US merger with Canada and Mexico is not out of the realm of possibility.
Just remember, the attack on sovereignty resulted in ponzi housing loans. The international banking community got their way. This is spelled out at dontpaycreditcards.com. Archive Link