Coming Week: Europe Crisis, 'Flash Crash' Flashback

Updated from 05/08/10

Update includes news that eurozone leaders were scrambling to create a euro defense fund before trading began Monday in Asia, as well as news that unusual trading at the center of Thursday's market crash is thought to have originated at Chicago-based Terra Nova Financial.

NEW YORK (TheStreet) -- Next week can't come soon enough -- or that's the sentiment anyway -- after violent swings whipsawed the markets on the back of mounting European sovereign debt dread. Then there's the little matter of Thursday's historic 998-point intraday nosedive that officials are still trying to sort out.

Market observers say these issues will stay with us heading into the coming week, but at least the weekend offers a cooling-off period after one of the more turbulent weeks in recent memory.

"We're still having trouble digesting what went on this week, let alone next week," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

"That's the beautiful thing about this marketplace," said Art Hogan, chief market strategist at Jefferies & Co. "It lets you step back and play another day. This week has just been the net result of a perfect storm of uncertainty, and hopefully, next week, some of that dissipates."

"Next week will be better," he added, sarcastically. "You heard it here first."

Still, a lot will await traders when they return.

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To recap, fear mounted last week as European Union and International Monetary Fund officials kept moving toward finalization of a bailout measure to rescue debt-strapped Greece. Concerns centered, however, on locales beyond Greek shores. Worries bubbled about a serious fiscal crisis that would not only envelope southern European neighbors like Spain, Portugal and Italy, but could ultimately spread beyond to Asia and even the U.S.

The euro hit a 14-month low against the dollar, and U.S. traders soon became more expert in the ways of Greek and Spanish bond yields. By Thursday morning, markets got wind that Moody's Investor Service raised the contagion specter, saying financial systems in several European nations could be at risk. Then, European Central Bank President Jean-Claude Trichet undercut any remaining positive sentiment, saying the central bankers didn't even bother discussing the buying of government bonds, leading to criticism of an authority vacuum in the midst of the growing crisis.

"There was no indication of any leadership [by the ECB]," said IHS Global Insight's Bethune. "This was very poorly managed in terms of dealing with a crisis, and the consequences are a lower euro and a weaker outlook for growth."

More on Europe's Debt Crisis

Greek Gold: Collateral on Bailout Money?