The solution is obvious to everyone except those who need to see it

It's becoming farcical. To believe that Europe can somehow extricate itself from it's predicament without some form of mass monetisation of European sovereign debts is borderline insane. The only way it is achievable is by inflicting a mammoth depression on the whole of Europe, and by extension the world - Europe is after all 25% of the world economy, roughly the same as the U.S.. And it's not as though the U.S. is going to be able to take up the slack.

The ECB needs to relieve the pressure by stepping into the bond markets. That will give governments time to put their fiscal houses in order. Otherwise it's going to be a mess.

Doesn't seem likely to happen though. The Germans are dug in hard and won't give an inch. Ultimately this will hurt them too - Germany is a big economy but it is nowhere near big enough to support the whole of Europe - but they seem to prefer to share the pain than sacrifice their ideologies.

So what to do?

This is basically a rerun of Japan's classic credit bubble explosion of the late 80's and early 90's, and interest rates there are still at effectively 0% 20 years later.

Asset prices there are still falling.

Inflation is net to non-existent, and frequently negative, because as I have mentioned before, when companies and individuals start saving hard the velocity of money collapses.

The U.S. is making the same mistake Japan has made for 20 years. Using Central Bank buying and huge government deficits to try to provoke growth, when all they are doing is pushing on a piece of string.

Europe has an opportunity to do the right thing. Use Central Bank financing as a tool to buy time, not as a tool to attempt to stimulate. Once government deficits and debt piles are shrinking then the huge drag they have become on the economies will fade and growth will restart naturally. It may take a few years, but the alternative is Japan and U.S. style attempts to throw ever more borrowed money at the problem, which has been shown time and again not to work. Both those countries have been lucky that their domestic Government bond markets have held up - Japan's because it is effectively closed and the BoJ and Post Office mop up the bonds, the U.S. because the $ is the reserve currency of the world so most major institutions have little option other than to buy the currency and the bonds.

Europe is not so lucky. As Germany has just discovered, austerity is going to be spreading fast as markets simply refuse to buy new bonds. Imposed austerity would be a disaster as it would likely be severe. The ECB can buy time by acting as a lender. The austerity pill will still have to be swallowed, but the dose won't need to be as big up front and the taste not as bitter.

It is time to stop believing another recession can be avoided. It can't, and in fact it shouldn't be. It should be welcomed as finally cleansing the system of the excess debt of the 90s and 00s and allowing true growth to reassert itself.

Meantime, what to do.... whether the ECB steps in or not, interest rates in Europe and the U.S. are going to stay lower for longer than anyone (except me apparently) thought, and the world economy is going into a major funk.

Equity analysts are micro-analysis morons who have no idea what is coming.

Economists seem to be finally getting it but it's taking time.

Stay out of equities, stay long bonds - but not ones denominated in Euros.