(Image source: France 24)

BY JIM FLINK

ANCHOR LAUREN ZIMA

After ten years, is it the end of the euro? Greece, Portugal, Ireland, Spain and Italy are all in financial trouble. Some are predicting each -- or all -- could exit the European Union in 2012.

BusinessWeek has the impact on the Euro Zone.

“Ten years after euro bank notes replaced national currencies on Jan. 1, 2002, the euro has for the first time recorded two consecutive annual losses against the U.S. dollar while plunging to a record low against the yen.”

So, what to do about the crisis? Some say -- save the Euro Zone.  Others say, let weaker countries -- like Greece -- fail and leave. The BBC has both views.

“It seems highly unlikely that Portugal will survive as well, so Greece and Portugal have to go, and the million dollar question is, can you keep Spain at the Inn?  Can you create a firewall around them? ... As soon as one country leaves the European monetary union, it will be a threat to the European Union as such.”

With the advent of 2012 -- decisions will likely come soon. The New York Times reports.

“The first test for the Continent will come this Thursday, when France is expected to raise as much as 9 billion euros. On Jan. 12, Spain plans to auction 3 billion euros worth of euro debt, followed by Italy the next day with 9 billion euros. Along with governments tapping the market, European banks are also expected to keep borrowing heavily as loans come due.”

Most of Europe seems to be looking at austerity as the solution -- in stark contrast to the quantitative easing strategy adopted in the United States. But is that the correct course of action?

Bloomberg talks with two analysts who see optimism -- or pessimism -- in the offing.

“The latest auctions here in Europe, where Spain for instance sold debt for a very low price, were quite successful.  So, at the moment it looks pretty good.”


“They have a massive coordination problem of the 17 nations in the Euro Zone. This really started in May of 2010, and here we are at the end of 2011 and we’re still searching for a solution.”

So what’s the end game? Hindu Business Line notes, that depends on whom you ask.

“There are those who believe that the fault lines ... will force nations towards a far deeper union: A European version of the US constitutional convention of 1787, which brought together the bickering 13 states; the creation of a mighty United States of Europe. Then there are the doomsdayers who believe that 2012 could see the collapse of the Euro Zone and a return to drachma, pesos and Deutschemark, exactly a decade after the single currency first entered circulation.”