"There is no economy in the world.. that will be immune to the crisis we see not only unfolding, but escalating," Christine Lagarde, the head of the International Monetary Fund (IMF) said on Thursday, warning that the eurozone's crisis threatens not only the developed world, but the entire global economy.
Nothing short of a miracle will stop the eurozone from falling back into a recession, but how deep and how long that recession is depends on how quickly the politics can be fixed and money can be found to reassure not just investors, but corporate financiers and ground-level enterprises that the single currency can be saved and growth restarted.
As economists at Bank of America Merrill Lynch wrote in their global economic outlook, released on Friday morning, "We're all Europeans now."
"While US events have had a strong 'CNN effect' on global markets, European news has rarely been as powerful. For example, the US payroll report is much more impactful than the German IFO index and the Fed usually overshadows the ECB," The outlook said.
"Apparently, when the US sneezes the world catches a cold, but when Asia or Europe sneezes the world offers a handkerchief. Unfortunately, the current strain of euro-flu is more contagious. Europe matters a lot more today due to capital market linkages."
This is a universal across the bank research outlooks being released in the run up to Christmas. Deutsche Bank's macro strategy report warned that nearly anything could happen, but that the risks were all to the downside.
Expectations that rich emerging markets - or the US - might come to the rescue by increasing their commitments to the IMF or directly to the EU's bailout mechanisms have, so far, been met with insistences that Europe must solve Europe's problems.
European markets opened slightly up and had fallen flat after a couple of hours trading. Many investors have probably priced in the longer term macro risks now, and are waiting for someone - possibly the ECB - to deliver a Christmas miracle.
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