As we approach the end of July 2012, the US stock market is on pins and needles in relation to the European sovereign debt crisis. Europe has never fully resolved Greece and behind is a traffic jam of countries that have issues with ballooning debt, high unemployment and large government spending. Spain is probably next in line to get their bailout finalized. Since each country in Europe is a fiscal equal (sorry that just refers to Germany), this problem has to be dealt holistically. Germany will have to lead this process and up to now, they have refused to do so for many reasons including why should they pay for other countries poor fiscal management.... .... Well then you never should have joined the Euro??? (that is crying over spilled milk)
Germany will need to decide whether they want to break the Euro and move on, creating a possible waterfall of countries defaulting or they will work with the ECB and create a "bailout" for these countries. I believe that the second is the best option for the current time frame, but I do not believe that the Euro can survive forever with most countries spending so much more than they take in. This issue is not just about austerity, but about creating an economic environment that fosters growth of the economy and job market. You can give people healthcare and lots of government perks, but eventually the well will run dry and that is where Greece, Spain, Italy..........are right now.
Germany and the ECB will have to make major decisions very soon and I hope, they do not decide what the US has.....keep spending and see how far we can get to the edge of the cliff.