The $64,000 question hanging over the global economy now seems to be centered squarely on the European Union. More specifically, Greece's debt problems are making people wonder if the country is the beginning of a painful domino effect. While Dubai's woes seemed to have been swept under the rug, Greece is a different animal. Further, it's got investors looking at other EU member nations (like Spain and Italy), and wondering if this is the start of a extremely serious fiscal and monetary problem.

Everyone's Problem
Thanks to financial innovation, Greece's problem goes beyond the EU. An unchecked default by Greece, or any of the other fiscally challenged EU nations, could likely have a Lehman-like effect on global markets. While the best way to protect your portfolio will always be to buy quality businesses at sensible prices and hold them for a period years, investors looking for a more direct way to protect and profit from a possible crisis in the EU have options. Ironically, these options are also available thanks to the wonders of financial innovation.

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Handle with Care
Several exchange traded funds are directly exposed to the the fortunes, or lack thereof, in the EU. With many sophisticated investors like George Soros becoming more skeptical of the euro, the Proshares UltraShort Euro (NYSE:EUO) is a leveraged bet against the euro relative to the U.S. dollar. The euro has fallen against the dollar recently as Greece's problems have lead many to abandon the euro in favor of the dollar. Of course, investors should remember that leverage works both ways, and levered ETFs work best when there is volatility on your side. If currency isn't in your flavor, you can a make a macro bet against Europe by using the UltraShort MSCI Europe ProShares (NYSE:EPV), an ETF that will perform twice the inverse of MSCI European index. Again, keep in mind that these levered ETF's can often cause more pain than profit due to the leverage.

Go Long Quality
A more desirable approach that is more firmly rooted in fundamental business analysis would be to consider the quality European names. While any sudden shock to the European Union nations would like not spare any stock market in the short run, names like pharmaceutical giant GlaxoSmithKline (NYSE:GSK) or Novartis (NYSE:NVS) are example of two excellent names that have very dominantly entrenched business models all over the world. In addition, both common equities have bond like yields of 6% and 3.5% respectively.

The Bottom Line
All investing entails a degree of risk. And while holding cash would certainly be a plus during a severe correction, investors are not without options when it comes to investing in times of crisis.

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