Here we go again. Another sovereign debt crisis on the periphery of the EU is underway and many of the same factors that led to previous debt meltdowns are present.

Germany is headed for a triple dip recession. Continent-wide deflation is nearly a reality. And many EU nations are smashing the debt limits demanded by treaty, thus threatening the Euro itself. All of this is impacting the percentage of debt in relation to GDP in several countries, making government bonds more expensive and debt servicing a nightmare.

The Hill:

Among Europe's most recent economic tremors has been the growing evidence that the German economic recovery has now run out of steam. Indeed, the most recent German economic data would suggest that the eurozone's economic locomotive is now likely to have succumbed to a triple-dip economic recession in the third quarter of 2014. Should Germany in fact experience another recession, there is little prospect that the rest of Europe will manage to get itself out of its present economic funk since it is so dependent on a healthy Germany for its exports.

Germany's most recent economic slowdown would seem to be all the more concerning for the eurozone since the forces that have caused the German economy to slump are not likely to go away anytime soon. That would certainly appear to be true of the escalating sanctions resulting from the West's standoff with Russia over Ukraine, the ongoing Middle Eastern geopolitical uncertainties and the significant economic slowdown in a number of major emerging market economies.

Yet another early warning sign that Europe could very well soon be heading toward the next round of its sovereign debt crisis is that it appears to be well on the way to outright price deflation. While the European Central Bank (ECB) does have an inflation target of close to 2 percent, the overall European inflation rate has already decelerated to 0.3 percent. Meanwhile, most countries in Europe's highly indebted economic periphery are now already experiencing outright price deflation. Sadly, there is every prospect that Europe will soon experience a real deflation problem. It will do so as its economy experiences a triple-dip economic recession at the very time that its unemployment rate is already not far from its post-war record highs.

The prospect that Europe could be heading for outright price deflation should be setting off alarm bells for its policymaking establishment. The public debt levels of most countries in the European economic periphery are already very high, as epitomized by an Italian public debt level of close to 140 percent of GDP. Such debt levels are very difficult to bring down to more sustainable levels at the best of times. However, in the context of an economic recession, which undermines those countries' public finances, and of outright price deflation, which increases that debt burden, those debt levels could be well-nigh impossible to reduce. One would hope that European policymakers appreciate how vulnerable this leaves the European economic periphery to the prospective tightening in global liquidity conditions in the period ahead as the Federal Reserve starts the process of normalizing interest rates sometime next year.

We've seen this all before. European policy makers flailing about, wringing their hands and then, at the last moment, coming up with a policy that kicks the can down the road a few years without dealing with the EU's sturctural problems. The European Central Bank is virtually powerless to affect the kind of fiscal and monetary policy changes that would bring the EU out of its doldrums. As long as Germany insists that other EU states like Greece, Ireland, and Portugal maintain their austerity regimes, not much will be done to boost economic growth.

A recession in Europe would almost certainly affect our own economy. As weak as we are, it's hard to see how we could avoid a recession ourselves.