Summary

Beyond the awful gravity of the euro zone crisis – the livelihoods destroyed by economic shock and government ineptitude – there’s a simple yet key lesson in market psychology to be learned: the bubble doesn’t always pop when it should. Looking back to the late 2000s, it was obvious that Greece was borrowing far more than it could hope to repay without the conventional safety valve of a national currency to devalue – the ‘backdoor default.’ Even at the beginning of 2010, years after financial mayhem on Wall Street shook the global economy, Greece was able to find buyers for government bonds despite a sky-high budget deficit and ballooning national debt. When investors tightened their purse strings and the bubble finally popped, it popped with a bang loud enough to shake the European Union’s very foundations. But it can’t be said that the bubble popped on-time.

Just as the Greek sovereign debt crisis didn’t keep to a logical timeline, so too might the next crisis in the euro zone. And with the dangerous cocktail of looming deflation and elections in Greece, Spain, and an increasingly EU-wary United Kingdom – 2015 is set to be a trying year for Europe’s “great experiment.”