The US is fine. So what if it enters a technical recession - they'll just print more $$$ which will start the hot money spiral all over again. (I know the inflation ramifications etc)
Europe is a mess. The market has basically forced the hand of action from the ECB. They need to do something soon. A solution to the problem is to write off debts via monetisation. Print money, buy bonds and write them off. Taking the politics out of it this is the most sensible solution.
As soon as the ECB bought bonds to prop up Italy the market recovered immediately.
The big scare is political games. This was essentially the ignition for GFC i.e the handling of US bank bailouts. Paulson wanted to teach the financial system a lesson. Haha well done. The same is happening now with world leaders only willing to agree to bailout terms based on fiscal resposibility. The time has come to put these issues aside and do the right thing and sure up the credit markets.
