Markets reacted with great exuberance to EU leaders finally come up with some sort of debt crisis resolution. Although this provides some temporary relief, the long-term view still looks dour. If you seem unconvinced, take a look at this frightening interconnected web of European debt exposure.
It’s clear that the current Eurozone package has only pushed out liabilities for another several months. Greece remains in the danger zone and the Italian situation is getting increasingly out of hand. A mere EFSF leveraging is no guarantee that the debt burden will be resolved and the search for outside funding reveals Europe’s lack of internal financial firepower.
Check out the video below from the Guardian to get an idea of how the European debt crisis is a storm that will continue to rage on, keeping the possibility of contagion very much alive.Contact Ulli