New measures needed for European debt crisis

Anxiety about a global recession triggered by the debt crisis is on the rise and the global financial market is intrinsically related to the fate of the euro and the debt-ridden European countries.

And there is no room at all for optimism toward the situation in the eurozone.P The Greek elections on Sunday, which are seen as a crucial crossroads for the country and will have a great impact, either positive or negative, on the eurozone, have hogged the spotlight.

The crisis in Greece broke out after the international rating agency Fitch downgraded its rating agency from A- to BBB+ in 2009, and the country has suffered most among the crisis-stricken European countries.

Greece's pro-bailout New Democracy party has stood neck-and-neck with the anti-bailout Radical Left Coalition (Syriza) party. Syriza leader Alexis Tsipras reiterated Thursday that, if his party won the election, the European Union aid agreement would be immediately abolished. If this happens, Greece will most likely be forced to exit the eurozone.

The National Bank of Greece has predicted a doomsday scenario for the economy after a Greek exit: economic contraction of up to 22 percent, an unemployment rate of 34 percent, a drop in per capita income by 55 percent and inflation of 30 percent.

Although the EU last weekend agreed to offer up to 100 billion euros (about 125 billion U.S. dollars) to save Spain's teetering banks, the bailout plan is quite sketchy and skeptism has remained about whether it will solve the country's fiscal and macro-economic issues.

On the next trading day after the bailout news, the New York and Asian stock markets were all dragged back down following a brief rebound.

In the meantime, investors around the world have also worried that Italy, whose banking system is also short of money, will be the next domino to fall.

The crisis may also strike countries outside the eurozone, such as European countries Hungary, the Czech Republic and Russia, Middle East countries with big oil and gas business with the euro area, as well as Australia and Brazil, which export iron ore to the region.

The current situation in debt-ridden countries is critical enough for the single currency bloc to find new solutions other than austerity measures, which have already brought a record-high unemployment rate of 11 percent in the 17-country bloc since the single currency was introduced in 1999.

Except for more bailout plans for troubled economies, ways to strengthen or reform the European banking system are also needed to solve the structural problems.

Furthermore, the eurozone member countries should pull together as a whole to confront upcoming challenges and build a firewall as soon as possible to prevent the economic crisis further spreading within or outside the euro area.