When the whole financial world is busy watching data releases and macro economic scenario of United States and also busy in predicting what could save the mighty US there is a bigger financial crisis looming in the other side of the world, the Europe.

Over the past few weeks the 10 year bond spreads on government debt of Greece, Ireland, Italy, Portugal and Spain over that of benchmark for Euro currency Germany have widened sharply.Euro zone countries (including Germany) are in deep recession and the EU company debt is now 95% of GDP compared to 50% in US.

Situation is even worse in Ireland and some Eastern & Central European members. Euro is losing its strength against dollar and there is wide spread speculation that Euro zone can be disintegrated because the rules of the single currency forbid any bailout of one country by the centre or by other countries.It is also predicted that if Euro crashes, Germany is going to suffer most from any member’s default and is expected to issue joint currency bonds. S&P has recently downgraded Spain, Portugal & Greece and has issued warnings against others saying that the chances of sovereign defaults are high.

Seeing all this I believe that the next leg of fall in the markets will be triggered by the bad macroeconomic news from the Euro Zone rather than the much hyped US. The data release to watch today is 4Q GDP growth of Euro Zone (QoQ) expected at -1.3% as against -0.2 in the previous quarter and any doward shock could lead to a further downward momentum in the global markets.

Thus even if Mr. Obama bails out US, the financial crisis is far from being over as the Europe is still sulking