The Euro Zone sovereign debt crisis came into light in early 2010 when Greece announced it might have problems servicing its debts. Since then, the troika – European Central Bank (ECB), International Monetary Fund (IMF) and European Union (EU) – tried to address this problem with various means, e.g., European Financial Stability Facility (EFSF), European Stability Mechanism (ESM) and Outright Monetary Transactions (OMT). Things have not improved, in fact, they are worse.
Spain might need to ask for bailout in the near future with its debt-to-GDP (Gross Domestic Product) ratio close to 100 percent and a quarter of its population unemployed. Italy is in the same boat with a debt-to-GDP ratio of close to 120 percent. The Greek parliament narrowly approved another austerity package, despite mass riots in the streets, in order to secure the next tranche of bailout funds.
The underlying problems that plague the EU are the lack of sustainable growth, weak employment market and stubbornly high unemployment rates. Injecting fresh money into the system and enforcing debilitating austerity measures cannot solve these problems.
To your success as a profitable trader,
Mario
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