This Isn\’t The First Time That Europe Is At The Tip Of World-Wide Pandemonium

What looked like a Euro Zone debt problem could have devastating effects worldwide just as the cataclysm of World War I did almost one hundred years ago and World War II did one generation after that. The Greek debt crisis began it all several weeks ago as discussed in the Tuesday, May 24, 2011 article in the Wall Street jNow everyone thinks it’s inevitable that there must be some sort of restructuring of debt for that Balkan country. As if that weren’t bad enough, over the weekend Spanish voters turned the Ruling Socialist Party out of office in droves, increasing fears that the new office holders will reveal more hidden local and regional debts. The final straw was a negative report on Italy’s credit rating on Friday.

Investors perceive that Europe’s Debt Crisis is worsening and is not isolated. It may pull the whole currency down with it as well as effect Europe’s politics. This only draws attention to the open dispute between the European Central Bank and the various governments of Europe about what to do with Greece’s growing debts.

All these splashy stories made the Dow fall 138.78 points on Monday. For the month of May the Dow was down 3.4%. The Euro slipped again. It fell below $1.40 on Monday and ended at $140.49 against the dollar. As a result investors fled to the security of U.S. and German bonds.

But ultimately the very security of Germany’s bonds depends upon the wide reach of the euro currency. So it cannot draw in its wings. It must spread them wide. It is only a tribute to the German people that after the immolation of World War II they are, phoenix-like, rising from their ashes and trying again and again until they get it right. Hopefully this time they can prove their mettle in dealing with the the Euro Zone debt crisis.