Europe is reeling under the pressure of massive debt that these countries have taken over their GDP and potential earnings. The way I understand it, countries don't have the luxury of investing the stock market as individual investors do. They primarily operate through the bond markets. This poses a large restriction on their earnings. Greece, is currently running a budget deficit of 12.5%. It is trying to finance its deficit through further bond issues (seemingly the only was of sourcing external money) but the world isn't buying. So what can it do then? Well, introduce 'austerity measures'! These austerity measures are nothing but asking the consumers of public-sector revenues to cut back. The people in focus would be pensioners, public sector employees and public-infrastructure projects and services. But guess what, the public isn't amused. They point to another way the government can get money - taxation. Interestingly, taxation raises money from the richest and austerity from the poorest. Ideologically, you would want to support the former that the latter. But according to economic principles (which I am not too clear about), austerity is the better way to go : (http://www.economist.com/displayStory.cfm?story_id=15606221)
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