'A Dummy's Guide To The EU Crisis'

http://seekingalpha.com/article/321074-a-dummy-s-guide-to-the-eu-crisis-and-our-moral-hazard-rally? 

'Step 1

After joining the EU and adopting the Euro (there are EU members that did not adopt the EUR), the GIIPS issued too much debt in good times when their borrowing costs were low. Their bond yields were low because as part of the economically sound EU, their bonds were now considered virtually risk-free, because markets assumed that the EU leadership, like the US Federal government, would never allow a member state to default. Supporting the risk-free view were rules forbidding nations from taking on excessive debt (ignored even by Germany). The result was bloated public sectors and/or housing bubbles.

Stage 1: Fatal Debt Inflammation Infects The Periphery

The most common theme among the countless 2012 global macroeconomic forecasts is that the EU sovereign debt and banking crisis is the likely determinant of how 2012 goes. So it’s critical for any investor to really grasp the current situation in order to make the right moves this coming year....'

http://seekingalpha.com/article/321074-a-dummy-s-guide-to-the-eu-crisis-and-our-moral-hazard-rally?  

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