Belt-tightening needed to get the West out of its rut

The global sovereign debt crisis has been a much talked about topic in Asia with the general consensus being that this part of the world is somewhat immune to the problems in the West. By and large this is being attributed to the restructuring of monetary policies in the region following the Asian financial crisis in 1997.

What has been a less covered topic is how the global private sector credit and housing crisis morphed into the current sovereign debt crisis and also how the developed Western economies can now get out of the muck.

Although the market has seen a pick-up in recent weeks, the eurozone is still way off from receiving a clean bill of health and from shaking off the problems of the sovereign debt crisis. With the €750 million ($975 million) bail-out package issued by the European Central Bank in the second quarter still not satisfying the market, it is expected that overall money and credit growth will remain weak in the region well into 2011.