The bonds Greece/Spain/Portugal hold and are defaulting on were largely purchased by German and French banks. These banks turned around and hedged the default risk with US banks. When the defaults occur (or if...they could choose to inflate to the moon or call the default by another name), the German banks will go to their US Bank counter parties asking to be made whole en mass. US banks will be unable to cover this pay out (unless the fed steps in with truly massive amounts of capital) and have no real reason to do so...
What we saw in the US housing crisis is now playing out on a scale of nations.
How does an inflating euro cause inflation in the dollar?