Now, It's Time to Worry...!

The European Union's $1 trillion emergency fund established to "defend" the euro has primarily served to remove any doubt that the currency's viability is in serious jeopardy. And despite an immediate pop in equity markets around the world, the move is much more a dark omen than a shot of much needed confidence.

According to Bloomberg (along with every other news source on the planet) European policy makers convened over the weekend to noodle how best to bolster their battered currency. The meeting took place after a week of rolling crisis roiled global financial markets and served as an eerie reminder of a crisis not nearly far enough in the rearview mirror.

The announcement, for all its jargon and superficial complexities, is pretty simple: The EU is going to solve a problem of too much debt by issuing more debt.

In order to protect member nations that are seeing yields on their sovereign debt soar, the European Central Bank will aggressively purchase both sovereign and private debt. The program aims to prop up markets where investors have been shunning credit issued by the so-called PIIGS (Portugal, Italy, Ireland, Greece, and Spain). European governments are pitching in as well, offering up to 440 billion euros in loans or guarantees alongside the International Monetary Fund, which is contributing up to 250 billion euros.

French Finance Minister Christine Lagarde nicely summed up the weekend's actions: "The euro zone will defend its money."

Not one to sit idly by when a crisis caused by too much debt is being fixed by creating more debt out of thin air, the US Federal Reserve announced plans to reopen a currency swapping program set up during the financial crisis in 2008. The scheme allows the Fed to funnel dollars into other coffers of other central banks to ensure that markets remain liquid.

So let's recap: Certain European nations got a little too wild and crazy during the good times, spending too much, saving too little, and relying on cheap debt to fund bloated domestic programs. Then, when the global economy spun out of control, mounting debt service obligations began to overwhelm shrinking tax receipts. Governments started to run out of money, investors got worried they wouldn't be able to make good on obligations, then all hell broke loose. Sound familiar?

I have seen this staged out before, traded through many European crisis in the 90's. It's nothing new, but a perfect opportunity to SHORT on a technical-recoil!