Despite a 110-billion Euro bailout for Greece, the crisis is far from over. It may yet turn into a European meltdown, since the future of debt-ridden Spain, Italy and other Southern European economies is still shrouded in grimness.

The plight of Greece brings to the fore, yet again, the issue of overconsumption and excessive debt-orientation at a larger scale. It is a mere continuation of the disturbing trend behind the sub-prime mortgage crisis in the US that triggered the global recession of 2008. While the American crisis began at a micro-level to spin out of control on a macro level, the Greek public debt crisis is a result of fiscally reckless national extravagance of a government. Yet, there are many inherent similarities between the two that need examining in greater detail.

Firstly, both the crises have been caused by a large section of the population living beyond its means for an extended period of time. Secondly, both the crises have rattled global investors and put a downward pressure on two strong currency pegs: the US Dollar and the Euro. Post the subprime crisis, the downfall of the Dollar pushed emerging economies toward decoupling their currencies. Just as the Euro was looking a lucrative pegging option, the Greek crisis flung it on a downward spiral and has triggered the need for a EUR 750 – billion international intervention to stabilise it.

Another striking similarity can be seen in the aftermath of both the subprime and Greek crises. Both have predominantly affected the developed Western economies, while the emerging economies including the BRICs have showed unprecedented resilience. The BRICs have, for example, maintained a robust growth rate averaging 5.2% despite the global credit squeeze and economic downturn. It is likely that the Greek crisis may not leave any lasting damage on these economies, especially since America is now firmly on the path to recovery. From the investor perspective, outlook for emerging markets is upbeat and hence, we may see ever more FIIs (and a lot of market volatility, as a result) flocking to India this year. But any rally, however good, may not be sustainable in the short run, since global economic pressures will act up.

Market volatility is not necessarily a reason for pessimism, merely a time to exercise caution. For the time being, staying cash rich is the best option, but the time to invest is not far off. Once the bailouts stabilise and the austerity measures in Greece and other Southern European economies start paying off, the ambiguity in the markets will ease off. Meanwhile, we need to keep in mind what these two crises have taught us:

• That there is no sector, industry or economy that ‘always goes up, never comes down’, hence never assume that an upward trend will last forever.
• That leveraging, per se, is not bad, but leveraging beyond your means is a recipe for disaster.
• That emerging economies like China, India and Brazil, are stronger than imagined by the West.
• That stringent financial regulation and policy-level discipline are essential to avoid, if not eliminate, indiscriminate asset bubbles.
• And most importantly, a debt-oriented way of life is not sustainable, whether on personal or on a country-level.