Europe and its debts: who is to blame and what to do?

Europe and its debts: who is to blame and what to do? Market continues to be skeptical about the euro. Inflation reports released last week suggest that the ECB will not raise interest rates at an aggressive pace. Otherwise, the European economy will face a strong storm with serious destruction.Reminder: Eurozone inflation above 8% (historic high). The ECB promises to raise rates twice by 25 bp at the next two meetings. The first reaction to such a move is an increase in bond yields in the least wealthy countries with high leverage (Greece, Italy, etc.) ECB stops net bond purchases. Accordingly, their yields will continue to grow, as well as all long-term rates.Apparently, the ECB has found a fresh way to control rates: the central bank will buy bonds of Italy, Spain, Portugal and Greece using part of the proceeds from the bonds of Germany, France and the Netherlands with an expiring maturity. That is, net purchases will be zero, but the share of riskier bonds in the ECB's assets is increasing.But that doesn't mean there won't be a debt crisis at all. There are also corporate debts, which in the Eurozone are estimated at 170% of total GDP. The problem is that in Germany and France, the situation in the economy is very difficult, and today it is impossible to estimate how long the support of donors will last.According to EPFR Global, investors are leaving Europe-registered junk-bond funds with $27.7 billion in outflows since the beginning of the year. And even if the ECB doesn't buy anything, rates will still be forced to rise.Another factor that can provoke increased volatility will appear today. The Fed's June minutes should show how decisively the Fed will act on its rates.If the FRS protocol reflects the aggressive mood of the majority of the Committee members, the dollar will receive fresh support. Otherwise, EUR/USD buyers can count on a corrective price increase.Profits to yall!