What Will Happen in Europe in 2012?

 | Dec 30, 2011 | 9:00 AM EST  | Comments
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Many of you are probably suffering from prediction burnout and many readers are probably already prepping for the nation's second-biggest amateur drinking night (the first being St. Patrick's Day). But we'd be remiss without some prognostication about Europe.

Europe's swings got about as much blame as high-frequency trading for the market moves this year. But the big disasters haven't happened. The euro will still be legal tender on Jan. 1 and France will start the year with at triple-A rating (barring some early popping of the champagne at S&P) and the euro zone and the European Union still have their full complement of members.

Historically, 2011 may go down as the greatest year of European cooperation since the invention of the Eurovision Song Contest. But the trend won't continue in 2012.

Here are 10 things to watch out for over there:

  1. Germany, Finland and the Netherlands will preempt all the concerns about the euro surviving and form a breakaway currency called the ducat, which quickly becomes the celebrity currency of choice. The addition of Finland makes it too complex for most hedge-fund managers to gauge and the immediately-created triple-leveraged long and short ETFs are exclusively traded by computers. The ducat trades as low as 8 cents before finishing the year at $9.62.
  2. The Greek population's reluctance to accept austerity measures results in the government trying more creative solutions. The country imposes a 20% tax on use of all English words with Greek roots. This bankrupts the Democratic Party.The European Union suspends sovereign debt credit ratings and introduces a new system based on motivational praise stickers. Bonds will be given a colorful-sticker rating with mottos like "You Did It!", "Super!" and "Great Effort!"
  3. Following the investigation into phone hacking by newspapers, the UK government and justice system concludes that readers can sue newspapers for making up stories out of thin air. The remaining News International titles immediately close up shop, Piers Morgan tweets that as editor he never knew what was in the Daily Mirror as he didn't read the paper and the Daily Mail focuses all of its remaining efforts on trying to get linked by The Drudge Report.
  4. Worried about persistent pressures on its bonds, Italy stops all electronic trading of its debt. The new open-outcry system runs for three hours in pits at the reopened Coliseum. Persistent bond vigilantes are forced to trade during battle reenactments and face trap doors and tigers.
  5. Tired of being constantly accused of printing money, the European Central Bank stops printing money. As bills wear out, all cash transactions are carried out in coins. The personal savings rate jumps among the elderly and non-buff.
  6. Hostilities nearly break out between France and Austria over what language the latest rescue package's acronym will be in. As troops mobilize, the global diplomatic community is bemused, thinking that no two European countries would go to war over something so ridiculous. It is then quickly reminded about the War of Jenkins' Ear.
  7. Scotland secedes from the UK over the coalition government's stance in Europe. It applies for membership in OPEC, statehood in the United States and to become the newest province in Canada (its safety school).
  8. Spain's austerity measures are relatively effective, but as the summer approaches the government is forced to try and curb the late-night eating and drinking culture to boost productivity. Hoping to increase tourist revenue, each major city holds a corrida de toros at 10 p.m., where bulls just smash through outdoor cafes, bars and restaurants. This keeps the deficit on target until later in the year, when the country is forced to rent its entire soccer team to China for World Cup 2014.
  9. As banks start to call for bailouts from the EU, a new bank decides to open up in Brussels. It sets up its HQ in an all-black cube with no windows and releases no information other than its mission is to employ only rogue traders. It quickly eclipses Black Rock in wealth management and ends the year slightly more solvent than every major French bank.
  10. As banks start to call for bailouts from the EU, a new bank decides to open up in Brussels. It sets up its HQ in an all-black cube with no windows and releases no information other than its mission is to employ only rogue traders. It quickly eclipses Black Rock in wealth management and ends the year slightly more solvent than every major French bank.

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