France is under heavy pressure as Greece is nearing bankruptcy. The carefree Southern European countries known for taking two-hour lunch breaks, also known as PIIGS (Portugal, Italy, Ireland, Greece, and Spain), sent alarms throughout Northern Europe since the south is enormously indebted to France and Germany. France now faces a two-fold crisis: from within France and from Southern Europe. The CDS premium soared.

The EU has prided itself on the economic bloc but has been found quickly forgetting unity as the financial crisis hits the continent. While other countries decide to issue bonds to save the Southern European countries, the lazy and now bankrupt grasshoppers, the hardworking German ant raises an objection: why should we share the loss

As the debt does not seem to drop despite the extended maturity of bonds, some critics say the problem lies in the lax finances of Southern Europe and that, therefore, the finances of European countries must be managed collectively. Others have even gone as far as to say the Union must be integrated as one nation like the United States. Will it be possible for countries with hundreds of years of history and strong pride in their own culture to be merged

If Northern Europe decides to integrate their finances with the south where the governments are facing angry protesters against the budget cuts, the richer north will have to repay Southern Europe's debt. Northern Europe is expressing strong opposition just like when some of the leaders suggested that European bonds be issued to rescue the troubled countries. The EU is showing a clear example that "money and power cannot be shared even between brothers."

Europe is shifting the responsibility for dealing with the loss, when the ailing south is getting worse, affecting the neighboring Northern European countries. From politicians to the public, nobody is taking the initiative to solve the problem. And the de-leveraging will continue - how can they overcome this financial crisis without major efforts

The stock markets have been shocked by the bizarre idea of trying to reduce the debt burden by creating more debt instead of reducing it for these already debt-ridden countries. The Asian financial markets, with all of Europe's smart money and hot money, suddenly finds itself victimized as well.

The Asian markets are acting as an ATM for European investors: the markets crashed and the exchange rate fluctuated a few times in one week. The majority of Europe's government bonds reach maturity in September, and many countries are retrieving money from the highly-liquid Asian stock markets. As a result, the Asian markets plummeted, but they will be able to regain some stability after September when a certain amount of Europe's government bonds will mature. The EMBI Global Spread, the emerging market bond spread of JP Morgan, is also stabilizing after a short-term peak.

Nobody is cool before debt and punishment

In its integration, EU made it a condition to "maintain the public debt to GDP ratio below 60 percent and fiscal deficit to GDP less than 3 percent." However, this gentlemen's agreement was not taken seriously by the lazy and torpid PIIGS. As shown in the Fiscal Deficit chart, China would be probably one of the few countries to qualify for the "60%, 3%."

This chart indicates that the US and European countries are in a difficult position to clear the debt. The unemployment rate and statistics shocked the global stock markets. It is hard to see the bigger picture when a country's public debt to GDP ratio is 100 percent - the conventional wisdom says that when the debt goes over 80 percent of GDP, economic growth comes to a halt. The debt trap destroys the country.

According to chart created by the bond master Bill Gross at PIMCO, the Ring of Fire includes the US, whose unemployment rate alarmed the rest of the world; Japan, whose debt is more than twice as much as the US GDP; Europe's PIIGS who have chronic issues with credit; and France as well.

Despite being in the Ring of Fire, the US and Japan, as well as the UK and France, are holding out well. And there is only one reason: they all have quasi-key currency based on the US Dollar.

The countries with currency that have weaker links with the USD - i.e. Spain, Greece, and Ireland, etc. - are walking a tightrope as other European countries are shifting the burden to one another, while China is weighing the options to either buy the bonds or provide financial support.

In any case, nobody can be cool before debt and punishment. It is only a matter of time until they collapse. Washington's transparent idea to drop the value of debt by causing inflation is laughed at by the smart money in the US and Europe who are walking farther away from them.

Just like the major corporations adopted a bold strategy during Asia's financial crisis, the giants in Wall Street have also been rescued by emphasizing, to the government, that they are too big to fail. The problem is with the government, however. Now they have too much debt to handle and "may now be too big to save."

It also didn't help that the politicians were giving out policies to take advantage of the situation, without seriously reflecting on their selfish behavior.

The words from European and American politicians never cease to amaze me: it is hard to choose who I should believe or whether I should believe anyone at all. It is not all so funny to hear people say that it is the politicians, not nuclear weapons or derivatives, that are most dangerous right now.

Imprisoned for national bankruptcy

The former Prime Minister of Iceland stood before the court - for his role in the collapse of the national economy. Half of the causes for the current global economic recession can be attributed to policy failure. The populist policies left the countries with garbage like in an empty stadium after the cheering audience is gone. Now national bankruptcy can put them in jail.

The US stock market soared by 2.5 percent overnight. Was it Obama's magic But what wouldn't he do when the president is faced with the worst approval rating and, therefore, a potential problem with reelection

Quantitative Easing, or QE, is a word hated by so many critics that it is inappropriate term for stimulus measures. The market reaction to QE so far explains why - so he came up with a 300 billion-dollar Jobs Plan this time.

The current employment rate and payroll of the US is the worst in 60 years. House prices cannot go up because people are having a hard time paying interest, and consumers are not very active either. The real estate market of the US right now reminds us of Japan's lost two decades. Working on the employment rate might take some time, but it is certainly good news to the US, and the stock market welcomes it accordingly.

The question is which industries will hire employees. Unlike Korea's Car, Chemical, and Oil, there is no major smokestack industry in the US, a country based on knowledge industries that only require computers and a few engineers.

The top company in the world by market capitalization, Apple does not make a single i-Phone or i-Pad in the US, as the company only designs the products in California and the end products are manufactured in China. The remarkable sales of Apple profits the shareholders and employment in China, but does not make much contribution to employment in their home country.

Although $300 billion job plans might temporarily help to raise hopes for Obama's reelection campaign, it will take a long time until we see the results. And the US is just like Korea in terms of the counterproductive battle between the major political parties. Republicans already began holding back Obama's plans, typically choosing opposition for opposition's sake. The stock market seems likely to see a temporary rise from the effect of 300 billion dollars.

Is it really only the credit crunch that caused the stock market to plunge

The crash of stock markets in the US and Europe can be explained in terms of the object economy as well as finances. Investors are keenly watching the words of Bernanke, and for change to sweep the financial and stock markets.

In the meantime, the fundamental American and European economies shows that these countries are in need of real economic stimulus beyond mere political games. According to the OECD Composite Leading indicators and Europe's PMI index, assuming that there is a pattern in stock index, the stock markets will need to either go down or support the weak signals rather than surging up.

In any case, people are faster than objects in sensing the current. The ability to smell where the money is can be more important than any sharp analysis.

The US Conference Board's Consumer Confidence indicates that psychological indexes such as consumer confidence precede the stock index by two to nine months at the highest and lowest points in economy. The reports on the lowest psychological index since the '70s signal that the stock markets will soon hit bottom.

Look at the forest, not the trees

Right now, the global economy and financial markets look almost like they are in a package of the worst conditions. Can we even talk about any hope or rise of stock values The history can be found in the history. We should not make the mistake of seeing only the trees and not the forest.

The Federal Reserve is keeping the US interest rate near zero - what about the real interest Negative. There is no way money will stay in the country then. Japan saw, after maintaining near-zero interest rates for over a decade, has the yen drifting around the world for a variety of speculations.

The US Dollar is following that path. The pace and scale of America's capital is unparalleled. Now the US Dollar is not the world's safest asset but the cause of instability for the world economy and finance. The heart of the US economy and financial system is out of order, unable to produce and pump out blood. Europe's brain is injured after partying too much. They just keep indulging in painkillers and antibiotics instead of going through a major operation when the problem is only getting worse.

Asia, which used to act as the hands and feet of the two regions, is the only region that shows no serious signs of problems. If, however, the problematic US and Europe start retracting the blood from their hands and feet, the emerging markets of Asia will start panicking too. And, after the markets regain some stability, the fake blood without white blood cell will rush in and Asian stock markets will skyrocket.

It is not the incompetence of Korean fund managers and analysts that causes extreme fluctuations of fund earning rates, but it is because they cannot properly read the seizure cycle of the US and Europe, like doctors cannot predict the next seizure of a cardiac or apoplexy patient. It is the tragic fate of Asian countries that don't have an international currency.

Coca Cola Case

The world economy at the moment seems to give a hard time to advanced industries, and IT is one of the most obvious examples. Semiconductors, LCDs, and mobile phone businesses that represent Korea are struggling in the stock market. High-tech industries lost their glamour overnight.

The economic recession of developed countries brought about decrease in consumption and stagnation of new technology development. For the last two and half years, the car, chemicals, and oil businesses (collectively termed Cha Hwa Jeong in Korean, or CHJ) enjoyed high times in the Korean stock market. There was no CHJ in developed countries as it is an investment pattern unique to Korea and a term created by the new world - China.

Looking at the bigger picture now, the advanced industries struggle while the under-developed ones flourish. It was the less developed countries, not the advanced ones, who survived the financial crisis. The countries who supply raw materials and produce goods for the under-developed countries are also benefiting. And Korea is one of the beneficiaries, happy for the rise of China like Columbus' discovery made Europe exhilarate.

The stocks that are related to the Chinese market, such as CHJ stocks, have seen a rapid rise and are much discussed these days. This economic recession and credit crisis could put China 10 years ahead of the West. Whereas the de-leveraging of western countries could apparently take as long as five years, China can maintain an exceptional growth rate of about nine percent. This means that the West can step back five years while China moves forward by five years.

Many major stocks in the US plummeted during the crisis but there was one exception: Coca Cola. And there was only one thing that could explain their survival in the midst of the chaos - the news that the company will expand the Coca Cola bottling business by investing 4 billion dollars in China.

China survived the latest financial crisis without major damage. The companies that have a high rate of sales in China are safe investments at the moment and even in the near future. Coca Cola recovered the stock price to the same level as before the credit crisis.

The latest financial crisis marked the beginning of the end of the West, and the rise of the emerging markets. However, to be named emerging requires no debt and abundant resources including the population as well as political stability.

Unless these three conditions are met, a country does not qualify as an emerging market from an investor's point of view. Recently, the Indonesian stock market showed strong performance. The country is close to the description. However, it is China that fits the requirements best among Asian countries.

The recent stagnation of China-related stocks in the Korean market can be attributed to the financial struggle of European and American investors, who tend to think of the country as a convenient ATM, rather than any problems with the Chinese market. Cash supply is the top priority in short-term stock trends. However, an excessive and sudden crash makes us look into the materials again. The fundamentals will be still alive even if the market is flooded with pessimism. For the next two to four years until the de-leveraging in the West is finished, it is China, the country that is still going strong despite the global crisis, that will serve as the fundamental for the Korean market. The Coca Cola case can make a good example of how we should look at the China-related stocks in Korea.