The Economist's Blog Free Exchange has a very good piece up on the EU situation. Please read the whole thing, but here's the first paragraph:
THE crisis in the euro area is beginning to feel like a permanent piece
of the world's economic landscape: a great red spot that just churns and
churns and never goes away. It isn't, though. One day the crisis will
be over, either because the euro zone managed to muddle through or
because it didn't, and came apart.
I think this is a very important point to make. All of the latest central bank policy announcements have included a section on Europe. All have stated the same thing: the EU is in a recession and that recession is negatively impacting world growth. But consider that this has been going on for a long time now; it's almost impossible to think of a time when we didn't have a problem in the EU area to deal with. That, in and of itself, provides a tremendous drag on future prospects and the overall outlook of market participants.