Clearly confused markets are struggling to comprehend the implications of the European debt problems which despite any short term political solutions will take years to rebalance.
The Financial crisis of 2008 created by irresponsible lending to institutions and individuals alike is even more visible with the current sovereign debt crisis in Europe. Any debt write off has implications for the lender, and currently that is the the worlds banks and their shareholders, us.
Austerity is the watch word as an attempt is made to tackle the problem. What is needed is a growth package but the conundrum is how to have growth and austerity, hence the quantative easing programme.
The difficulty for markets at the moment is deciding between depression, recession, stagflation or weaker economic growth. At the same time the worlds second largest economy, China, is growing at over 9 % per annum , all very confusing.
