December 8th, 2011
02:40 PM GMT
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London (CNN) – The future of Europe’s single currency hangs in the balance, interest rates are moving and the debt crisis threatens to trigger a recession next year. Faced with such uncertainty, there’s only one option left for traders across London’s financial district: Look on the lighter side.

One broker sent me an email this morning suggesting Sir Alex Ferguson was now advising German Chancellor Angela Merkel and French President Nicolas Sarkozy on their European exit strategy. His message - sent in jest - poked fun both at Manchester United’s shock departure from the Champions League and the bailout fatigue setting in among Europe’s biggest economies. Jokes aside, the point is even the strongest teams can face relegation.

That’s a concept the leaders of France and Germany have become more familiar with in the past few days after ratings agency Standard & Poor’s cautioned it may cut their coveted AAA credit scores.

Make no mistake, as Europe’s 27 heads of government gather for this year’s final pow-wow in Brussels, they are playing a dangerous game and the stakes couldn’t be higher.

More than 330 million people have abandoned their money in favour of the euro, banks have billions of eurozone bonds on their balance sheets, and the single currency prices nearly a quarter of the world’s foreign currency reserves. They owe it to millions to come up with a lasting and credible solution.

The eurozone’s sovereign debt crisis has unseated five governments and caused three countries to be bailed out.

The gloves have come on and off at various stages as politicians debate how best to deal with the issue - and yet the propensity for domestic interests to hijack the Brussels negotiations remains significant.

Although Germany and France have set out a five part plan this week to tighten the block’s rules on budgets, senior eurocrats tell me we won’t know until late on Thursday whether the new proposals will apply to the entire EU or just the 17 members sharing the euro.

One EU official said the decision would likely involve some hefty lobbying and may well be made "over coffee and cognac."

And that’s just the first hurdle they will have to overcome.

Standing on the sidelines as unofficial referee is European Central Bank President Mario Draghi, announcing his second rate cut within the first few weeks of his tenure. A bold move certainly but the ECB has been loath to bend the rules.

Draghi now says the bank may delve into its toolbox, presumably if EU countries can present a united front.

It better do soon, or else monetary policy makers and politicians alike will be entering 2012 having already scored a hefty financial own goal.



soundoff (24 Responses)
  1. David

    This E-U/europest is corrupting politicians our (Swedish) prime minister have now declared that we will have to give substantial amounts of our good money to IMF to squander on the euro, we don’t even have the currency why should we pay for it? No doubt he’s using our money to buy a highly paid job in Brussels. These continentals and their worthless currency are now going to financially weaken us even before it collapses… just great so when it happens we will already have lost our high rating and our economy will have stopped growing, career politicians should be outlawed.

    December 8, 2011 at 3:18 pm |
  2. James

    Euro is fine, nothing will happen tmrw, the USD index will go up a little bit today and tmrw, next week another downward movement for the US Dollar index and Euro gain again. You heard it here.

    December 8, 2011 at 4:58 pm |
  3. Oscar D

    Whoever is in charge of headlines and imagery at CNN clearly wants to whip up a crisis.

    December 8, 2011 at 5:09 pm |
  4. Nicolás Bozzo

    The problem is not the Euro, is the Euro´s economies, more specifically Euro´s governments...

    December 8, 2011 at 5:40 pm |
  5. edzis

    December 8, 2011 at 5:48 pm |
  6. DEEJ

    "The future of Europe’s single currency hangs in the balance...". Last time I looked Europe did not have a "single" currency.

    December 9, 2011 at 1:57 am |
  7. Emre Adams

    euro is collapsing

    December 9, 2011 at 2:52 am |
  8. water

    Europeans are great benefits, ah, work and easy

    December 9, 2011 at 4:32 am |
  9. rotorhead1871

    THE EUROPEANS CANNOT WORK TOGETHER===too much sovereignty to be overcome......but the debt is due...

    December 9, 2011 at 4:43 am |
  10. truthhurtsss

    Why do "analysts", "heads of research", “CNN writers", "Bloomberg writers", etc, keep expecting and hoping that there is (or are) a solution to all these mess of debts? Are they ignorant, in a state of denial or plain idiots? How can you have a "solution" to all those debt problems? Those banking debts, sovereign debts, household debts and etc debts.

    Can't these people do a few simple arithmetic calculations? There is no way out of this mess! There is just no way to pay off the debts! If this kind of talk or expectation came from Bernanke, Obama, Geithner or all those self-serving politicians and office-bearers(including European ones), I can understand their self-serving motives, but from people who should be of the "other side"????

    "There is NO MEANS OF AVOIDING a final collapse of a boom brought about by credit expansion. The ALTERNATIVE is only whether the crisis should come SOONER as a result of a voluntary abandonment of further credit expansion or LATER as a final and total catastrophe of the currency system involved." – Lugwig von Mises

    December 9, 2011 at 5:09 am |
  11. truthhurtsss

    Unfortunately, Lugwig von Mises also has an answer as to why these idiots keep expecting a "solution":

    "No one should expect that any logical argument or any experience could ever shake the almost religious fervor of those who believe in salvation through spending and credit expansion."

    December 9, 2011 at 5:09 am |
  12. Paul Johnston, PhD Economics

    THE EURO EXPERIMENT IS OVER- THE EURO IS DEAD AND BURIED– RISK IS TOO HIGH FOR INVESTORS WORLDWIDE!
    GET OUT WHILE YOU CAN.

    December 9, 2011 at 5:31 am |
  13. argueme

    argueme if I'm wrong. Nothing would hapen to euro. Germany is greatest exporter. Paradoxaly they much benefit from weak euro. So there would not be any shrinking for eurozone to just 17 countries (as this would make euro very expensive. plus having in mind sweden entering and powering eurozone onesmore). It's just a fog.

    December 9, 2011 at 5:37 am |
  14. d

    someday germany was gonna control europe

    December 9, 2011 at 6:08 am |
  15. Paul Johnston, PhD Economics

    Most EU Leaders are corrupt power hungry ex-communists leading in Brussels who don't know what they're doing– They all have to go! - WAKE UP EU CITIZENS - You're being ruled by a dictatorship of lying fools. The Euro deal was a sham!

    December 9, 2011 at 6:15 am |
  16. Peter TW

    The enemy is private oil corporations and multinationals. They have been manipulating the market by credit downgrade and oil inflation. Dump all petrol and oil vehicles and see them spinning of the road. and thereby relieving people of the world from inflation, interests on loans, monetary abstract krap.

    December 9, 2011 at 6:49 am |
  17. Hmmm

    There is no "single" EU currency. There is just a currency shared by 17 (Eurozone) out of 27 member states of EU. And all members of Eurozone agreed about the discussed plan..soo ???? Why all the doom preaches and speeches ?

    EU was always split to two groups, nothing new, nothing changed...

    December 9, 2011 at 11:11 am |
  18. Water

    CNN is heavily paid for this kind of news just as Rating agencies

    December 9, 2011 at 1:06 pm |
  19. Water

    Euro ia an Ambition, a dream ,a safeguard of a group of people having same culture ,language , and ethnic orgin .Let it grow
    Don't suffocate it , Mr & Mrs CNN

    December 9, 2011 at 1:10 pm |
  20. Pavlina Jansen

    THE EU IS DOOMED TO DISASTER- INVESESTORS KNOW AND ARE GEETING OUT FAST!

    December 9, 2011 at 2:25 pm |
  21. poll4europe

    EUROPE and the EURO.

    Or OUR future.r.

    December 2011

    What is the future of Europe ????

    Do we want to grow???? And what are we willing to share ???

    How can we grow strong and stronger???

    Only by changing !! And a lot of people will not like any changes and therefore halt progress.

    I have to admit I am a royalist, but at the same time royalty has no longer a direct place in a Europe that wants to grow and compete on the world market.

    Look at the British Empire and at the Kingdom of the Netherlands. World powers before the last war and now just as much members of the EU as all the other states. Kings and Queens now have ceremonial roles, far different from their previous roles as Head of State. I am sorry to say that I see no future for these ruling families in the future of a new Europe.

    What is their role once we sort of have a President of Europe????? No more than a puppet and who wants to be seen as a puppet ?

    If countries want to be a member of a United Europe we may want to take a look at the United States. How much as we do not like to compare ourselves with Uncle Sam. There we see states united under one flag, with one language, one dollar and with one government in Washington DC. If we want to copy part of that we must give away local and national powers to an elected European Central Government. And we better see to it that we will have more elected parties than the two in the American electoral system.

    I always think about my grandparents who were born just before 1900. The changes they have seen in the world are far larger than the switch we have to make.

    It is a lot about emotions now.

    Do we lose our King or our Queen, our flag our national anthem, maybe our language??? All nasty things, but something has to give in order to proceed. Do we lose control of our own little national destiny, YES. But what do we stand to gain?????

    We have to look to the future. If we do not take steps soon we certainly will lose out to the big ones of the future China, USA, India, Brazil, Russia.

    We the people have to decide what destiny we want.

    Just chose.

    With love,

    December 9, 2011 at 3:07 pm |
  22. icon pack

    You have hit the mark. Thought excellent, it agree with you.

    October 10, 2012 at 11:55 am |

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