News has emerged today that Cyprus, the EU and the IMF have agreed to measures that will deliver a bailout of the banking system in the troubled tiny Mediterranean tax haven.

Great, that's over now, right? Phew! If only…

The banking crisis in Cyprus shook financial markets last week, triggering heavy selling around the globe. The crisis seemingly came out of nowhere. Well, at least it seemed that way to those that are uninformed.

To those that pay attention to the underlying data, it is no surprise to see the European debt crisis rear its ugly head again. As we have been telling investors in our reports and at our trading seminars - the market's rebound in the last nine months is not proof that the problems in Europe have been solved - rather just that the problems have mostly moved to the back of investors' minds.

Investor sentiment is certainly important, and was probably overly bearish last year - but just imagining that a problem doesn't exist doesn't mean it has gone away.

We are of the firm belief that it will be a long, arduous, hard slog in Europe to get the collective European economy back on track. And until it's all done and dusted, investors should be prepared for more flare-ups.

Super Mario

The turning point in the European crisis was in late July last year when ECB President Super Mario uttered infamous line '…the ECB is ready to do whatever it takes to preserve the Euro….and believe me it will be enough'.

That one line, delivered to reporters as he was walking down the corridor from an ECB conference is the single biggest factor behind the Australian market's 25% rise since mid-last year.

With that, investors were reassured that the problem in Europe has been solved.

The truth is that little has changed to the underlying debt problems in Europe - outside of a boost in confidence that that problem won't descend into global financial system chaos.

Many European countries have taken (or been forced to take) the brave decision to undertake austerity programs. This essentially means governments are looking to cut spending and raise taxed in order to reduce budget deficits (what happens when governments spend more than they earn).

We believe this is a more appropriate strategy to deal with a debt crisis - as opposed to the American stimulus solution where the approach is to pay off too much debt with….more debt.

But taking a look at some economic indicators really illustrates how difficult it will be for European countries to first balance their books and then eventually make major headway into paying back its debt.