I believe you are implying that infinite fiat money is worthless; that these pieces of paper will be revealed as merely the fig leaves covering the immodest financial and budget mess our governments are in. Agreed. But, that is tomorrow's problem; insolvency is on, or over, the horizon somewhere.

Today's problem is illiquidity and banks don't have the luxury to make a stand about the state our countries’ finances. If the market is accepting these sovereign bonds as the best form of collateral, so as to access short-term funding, then that's what banks will use (even though we all 'know' the chances of being paid back in full in real terms is not a winning investment decision). As I attempted to explain in the article, these are not investments but merely tools.