The European Union accounts for 20% or more of global GDP and has a huge middle class that consumes  on par with their Socialistic governments.  There are 27 countries in the EU, of which 17 are part of the Eurozone who adopted the Euro as their currency.   Germany, France, the UK, and Italy appear to be on paths of modest but sustainable growth; but a debt crisis in Portugal, Ireland, Greece, and Spain (so-called PIGS) has put these countries into likely recession.  With the globe climbing a delicate path of recovery, problems in Europe cannot be discounted. 

To understand where Europe is headed, we must first tune into the nature of their current problems.  Europeans in general have been responsible consumers and did not entirely follow the path of Americans’ wild, debt-fueled consumption journey over the last decade.  Unfortunately, many of the European governments were not nearly as responsible as their citizens and other countries around the globe.  These governments behaved more like US consumers, accumulating debt far in excess of what their economies could support.  In fact, Greece, Italy, Portugal, Ireland, and Spain have debt levels of more than 1.25 times their annual GDP.  The most troubled of these have debt that is close to 2 times annual GDP.  History has shown us that debt levels of over 1.5 times GDP generally have led to default or at least severe inflation after attempts to monetize the problem.