why is the asx going higher?

Hi everyone,

I'm half thinking out aloud here and wanted everyone's thoughts on the ASX and global markets, especially regarding the European Debt Crisis. Firstly, let me explain my understanding of the debt crisis and please correct me if I'm wrong.

Basically, governments in Greece, Ireland, Italy, Portugal and Spain borrowed money during the good times, and now have huge debts that they can't repay. They can't repay it because their economy is not growing enough. Because it is not growing enough, they have to ask for a bailout so they can meet their financial obligations. This bailout though must be repaid as well as the interest.

Because the bailout is borrowed, this means the economy must then grow even more than it was before, as it must now meet a larger repayment due to their increased debt. As the global economies are continually decreasing, the country has to ask for another bailout. My understanding is these bailouts come from the European Financial Stability Fund, which all EU countries contribute to.

From my understanding though, other countries that are also in debt contribute money to the EFSF. This money they contribute isn't actually their own, as it is borrowed from their own bailouts they received in the past. This in simple terms means:

'Indebted countries are lending money they don't have to other indebted countries.'

Surely this means that eventually the bailouts required will be so large, the central banks/EFSF won't be able to print enough bailout money.

This whole situation sounds like a ticking time bomb. waiting to cataclysmically explode.

My question then is if this is the case, why is the ASX and overseas markets going higher?! Surely everyone realises there could be a potentially world changing event just around the corner?

I'd love to know everyone's thoughts and am happy to be corrected on the matter by anyone who knows about the topic.