Six predictions for consumers in 2012

4. No long-term solution in Europe, but no roadblock, either

Patrick Sinkel/AP/File
In this file photo from August, a broker looks at computer screens at the stock exchange in Frankfurt. Europe is likely to muddle along in its debt crisis during 2012, which should keep it from triggering a worldwide recession.

Like it or not, we live in a world where the fate of other nations affects our bank accounts here in the United States. If the crisis escalates to the point where European nations default, a global double-dip recession would be likely, which would obviously mean job cuts, widespread default, and slowed economic activity. On the other hand, if the European Union and the European Central Bank somehow find a long-term solution that preserves Germany’s trade dominance while cutting deficits and spreading the remaining debt appropriately across nations, then markets would get a boost and economic recovery would be expedited.

Neither will happen in 2012. The problem at hand is complex, yet one that must be addressed. That is why a series of temporary solutions that prevent default in the short-term and buy time for a lasting resolution is likely – a theory supported by recent European economic history. Since Europe won’t be a roadblock to US economic recovery, consumers and their finances will take a step forward in 2012.

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