The Greek Debt Crisis

I have been struggling with the recent response to the Eurozone debt crisis.  Quite simply, the EU has made it evident that they will print money to pay the debt of a member that is in trouble.  Although this may seem reassuring in the short term, a basic problem exists.  With much of the EU counties' debt denominated in Euros, this fundamentally ensures the devaluation of the Euro, to the detriment of global investors.  By allowing debtor nations to pay back the debt with essentially devalued currency, the EU does little to ensure the fundamental economic reforms will happen in the weaker member nations, referred to as the PIGS (Portugal, Italy, Greece, and Spain, with honourable mention to Ireland). 

We have seen how well received Greece's austerity measures have been.  Less notice has been given to the electoral rebuff dealt to Angela Merckel on the weekend.  Reforms will be unwelcome in both the weaker, and stronger states of the Euro.

If that is not troubling enough, read this Financial Post article (CLICK HERE) on the emerging sovereign debt crisis in the US.

Stay tuned.  This story is far from over!