Prescriptions for Euro Crisis

US equity market again struggled on Monday as stumbling talks on Greek debt. How can we resolve the euro woes so as to free the depressed equity bull from inside the fence of fear?

Here are Soros’s keen insights and sound prescriptions for Euro crisis,

http://balticbusinessnews.com/article/2012/1/30/george-soros-new-year-same-crisis

“To be more specific, a European solution to the euro crisis involves a delicate two-phase maneuver, similar to the one that got us out of the crash of 2008.

When a car is skidding, you first have to turn the steering wheel in the direction of the skid. Only after you have regained control can you correct your direction. In the eurozone’s case, governments must first impose strict fiscal discipline on deficit countries and encourage structural reforms. Then stimulus is needed, because structural reforms alone will not suffice to escape the vicious deflationary circle.

The stimulus will have to come from the EU, and it will have to be guaranteed jointly and severally. It is likely to involve Eurobonds in one guise or another. It is important, however, to spell out the solution in advance. Without a clear game plan, Europe will remain locked in a spiral of mutually reinforcing economic decline and political disintegration.”

Today, we have seen European leaders echoes the similar idea:

http://www.cnbc.com/id/46189630

“Bowing to mounting evidence that austerity alone cannot solve the debt crisis, European leaders are expected to conclude this week that what the debt-laden, sclerotic countries of the Continent need is a dose of economic growth.”

It seems like a long shoot to resolve the crisis. Therefore, I think the market will still be quite volatile in year 2012. And we should learn to take advantage of this volatility to invest in dirt cheap but high quality stocks.