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The European debt turmoil is not a cyclical liquidity crisis. Rather, it is a structural solvency crisis that requires immediate solutions. Dan Steinbock explains why the euro area crisis is only beginning - and explores how this challenge can be overcome.

The most dangerous myth, and one repeated daily in much of the major media, is that these troubles on both sides of the Atlantic are a result of a "debt crisis", and can only be resolved through fiscal tightening. The United States is not facing any public debt crisis at all, with interest payments on the debt at just 1.4% of GDP. Some eurozone countries do have a "debt crisis" - for example, Greece. But this is only because the European authorities have failed to take the necessary steps to resolve it, and have, instead, made it worse by shrinking the economy. In other words, there is no legitimate economic reason for a sovereign debt burden - even an unsustainable one - to result in years of economic stagnation and high unemployment. If the debt needs to be restructured because it is not payable, as in Greece, then that should be done as quickly as possible and with enough debt cancellation to make the resulting debt burden sustainable - as Argentina did with its successful default in 2001.

Cuando una crisis financiera se combina con una crisis económica, los Estados se ven obligados a inyectar dinero a paladas en la economía para salvar a los bancos, para pagar los subsidios de desempleo y en última instancia, si es necesario, para cavar zanjas y después volver a echar tierra sobre los agujeros para evitar una depresión, que en economía es una suerte de agujero negro. Después de eso suelen venir crisis fiscales: algunos países son incapaces de pagar la factura y van a la quiebra.

When Perry accuses Ben Bernanke of treachery and treason, his violent rhetoric ("we would treat him pretty ugly down in Texas") is scary in itself. But we shouldn't let that obscure Perry's substantive message - that neither Bernanke nor the Fed really deserve to exist, to control the US money supply, and to work towards a dual mandate of price stability and full employment. For the first time in living memory, someone with a non-negligible chance of winning the US presidency is arguing not over who should head the Fed, but whether the Fed should even exist in the first place. Looked at against this backdrop, the recent volatility in the stock market, not to mention the downgrade of the US from triple-A status, makes perfect sense. Global corporations are actually weirdly absent from the list of institutions in which the public has lost its trust, but the way in which they've quietly grown their earnings back above pre-crisis levels has definitely not been ratified by broad-based economic recovery, and therefore feels rather unsustainable. Meanwhile, the USA itself has undoubtedly been weakened by a shrinking tax base, a soaring national debt, a stretched military, and a legislature which has consistently demonstrated an inability to tackle the great tasks asked of it. It looks increasingly as though we're entering Phase 2 of the global crisis, with 2008-9 merely acting as the appetizer. In Phase 1, national and super-national treasuries and central banks managed to come to the rescue and stave off catastrophe. But in doing so, they weakened themselves to the point at which they're unable to rise to the occasion this time round. Our hearts want government to come through and save the economy. But our heads know that it's not going to happen. And that failure, in turn, is only going to further weaken institutional legitimacy across the US and the world. It's a vicious cycle, and I can't see how we're going to break out of it.

Jean-Claude Juncker's and Giulio Tremonti's common European bond is the first constructive idea since the outbreak of the eurozone financial crisis a year ago. It is the first time that eurozone leaders have dared look beyond the current week's newspaper headlines. I have no doubt that, if implemented in full, the proposal would end the crisis.

As fear continues to spread over the impact of the Greek debt crisis, more people are questioning how such a small country could impact markets around the world.

The media has been so preoccupied with acute symptoms of the debt crisis - sliding home prices, foreclosure abuses, ongoing Euromarket bank/sovereign debt stress, ongoing battles over financial regulation implementation, unhappiness over the Fed's QE2 - that lingering problems are not getting the attention they deserve. High on the list is the how the weak job market is affecting new college and advanced degree program graduates. We have an unspoken social contract: young people who get an education, particularly a "good" education (which means more elite universities, more serious courses of study, graduate degrees) are supposed to be rewarded by higher lifetime earnings. And the prospect of higher lifetime earnings in turn makes it rational to borrow to invest in education. But this whole premise has started to go awry, and the huge uptick in unemployment has started to make matters worse.

The growing crisis in the eurozone threatened to undermine the global economic recovery as markets plunged across the world on fears that European leaders may not be able to contain the debt contagion spreading from Greece.

Parece que Europa no encuentra de manera definitiva el camino de la recuperación. Si ayer las dudas sobre una posible recaída en la recesión hicieron que la Bolsa viviera sus peores momentos desde el inicio de la crisis y la caída de Lehman Brothers allá por septiembre de 2008, hoy es el presidente del Banco Central Europeo, Jean- Claude Trichet, quien califica la situación de "dramática" y de la peor vivida desde la Primera Guerra Mundial.

Optimists see economies shaking off recession and corporate results improving. But pessimists see a growing debt crisis and a new slump that the world would be powerless to halt

The double dip of this crisis is upon us. The latest data agree: the housing market has been in full double-dip mode for five months as home prices keep declining. The foreclosure disaster keeps increasing the combination of homeless families and empty homes. Think capitalist efficiency. Unemployment rose back above 9 % again. The average length of unemployment is now 39.7 weeks, the longest since these records began in 1948. Investments by businesses are decelerating and governments keep dropping workers. 

The US will turn a small profit on the financial support banks, mortgage lenders and car manufacturers received during the financial crisis. So reports the US Treasury. Especially the support for more than 700 banks was profitable. The support for car manufacturers has cost billions of dollars, but the Treasury says it has resulted in 230.000 new jobs. American households have lost $12.3 trillion since the crisis.

We provide direct evidence of market manipulation at the beginning of the financial crisis in November 2007. The type of manipulation, a "bear raid," would have been prevented by a regulation that was repealed by the Securities and Exchange Commission in July 2007. The regulation, the uptick rule, was designed to prevent manipulation and promote stability and was in force from 1938 as a key part of the government response to the 1928 market crash and its aftermath. On November 1, 2007, Citigroup experienced an unusual increase in trading volume and decrease in price. Our analysis of financial industry data shows that this decline coincided with an anomalous increase in borrowed shares, the selling of which would be a large fraction of the total trading volume. The selling of borrowed shares cannot be explained by news events as there is no corresponding increase in selling by share owners. A similar number of shares were returned on a single day six days later. The magnitude and coincidence of borrowing and returning of shares is evidence of a concerted effort to drive down Citigroup's stock price and achieve a profit, i.e., a bear raid. Interpretations and analyses of financial markets should consider the possibility that the intentional actions of individual actors or coordinated groups can impact market behavior. Markets are not sufficiently transparent to reveal even major market manipulation events. Our results point to the need for regulations that prevent intentional actions that cause markets to deviate from equilibrium and contribute to crashes. Enforcement actions cannot reverse severe damage to the economic system. The current "alternative" uptick rule which is only in effect for stocks dropping by over 10% in a single day is insufficient. Prevention may be achieved through improved availability of market data and the original uptick rule or other transaction limitations.

It was neither tax evaders in Greece nor hedge funds that caused Europe's existential crisis -- political leaders in the euro zone share a great deal of the responsibility. They have been either unwilling or incapable of doing their jobs.

Economics: I'm going to discuss trillions of dollars in a moment. As an economics teacher, I understand numbers this large are extremely difficult to imagine. If you are among the majority with this difficulty, I recommend that you follow the expert testimony that paints the picture, and know that success in this area of public education transformation that unleashes trillions of our dollars for human creative capacity in unimaginable power is sufficient to end the current economic crisis. This is the longest section of my briefing. If you tire in reading, please consider that at trillions of dollars of annual public benefits, you literally have nothing more valuable to do than understand the following facts and ideas. Harvard's Linda Bilmes co-authored a paper with Nobel Prize winner Joseph Stiglitz estimating the long-term costs of current US wars at now $3 to $5 trillion ($30-$50,000 per US household of $50,000/year income), with total debt increase since 2001 of over $10 trillion. Remember, as demonstrated by the evidence disclosed by our own government, all the reasons Americans were told to go to war were known to be lies as they were told and applicable law proves these wars Orwellian unlawful. Just down the Charles River from Harvard, MIT's Simon Johnson (and former Chief Economist of the International Monetary Fund) describes our economy being lead by gambling oligarchs who have captured government as in banana republics (his words), and might plunge the US into an economy worse than the Great Depression. From his article under the telling title, The Quiet Coup: "Elite business interests-financiers, in the case of the U.S.-played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The govern

Germany balked for weeks over a possible bailout for Athens. Now its delays are coming back to haunt it in the form of intense international criticism of Angela Merkel's crisis management.

As Greece inches closer to the brink of financial collapse, fear that the debt crisis will spread is engulfing Europe.

Chancellor Angela Merkel's strategy for dealing with Greece's untenable debt problem was to stall and hope the crisis did not demand action until after a critical state election in early May. On Wednesday, the clock finally ran out.

Europe's consistent inability to move quickly enough to get ahead of the financial markets during the Greece crisis is shaking the euro and the foundations of the European Union itself, as critics of the euro have long predicted would happen.

Leaders from the euro zone countries signed off on a support package for Greece on Friday night and pledged to take steps to stanch a spreading debt crisis before markets opened on Monday morning.