The December 9th meeting of the heads of the European Union will not be the end of the European Union, but it may very well move forward the eventual end of the euro as we know it.  Everyone agrees that a withdrawal of Greece or Germany or some other country from the euro zone will create chaos, panic, and another leg down in the economic depression.  In many respects, history is repeating itself once again.  During the Great Depression starting with the stock market crash of 1929, the world economy, although crippled appeared to be managable.  It wasn't until the Kreditinstaldt  bank failure in 1931 that the real global economic pain occurred.

To be sure, the entire world and everyone in the European Union does not want anything even remotely like this to happen.  But, there are serious -- serious disagreements between the various partners of the EU as to what should be done.  France and most EU countries want the European Bank to act like the Federal Reserve Board in the US, and be the bank of last resort.  Germany is isolated in its insistence that nothing of the kind should be done. They say that in order for this to happen, a United States of Europe would have to be created.

One reason for German intransigence is the conservative majority controlling the Bundestadt.  If you want to be conspiratorial, you could say that German bankers are the villians for insisting that Greeks, Italians, and other Southen European countries are not willing to tighten their belts sufficiently to make the bond payments necessary to maintain the solvency of major banks. This is also in line with the policies put forward as poisonous prescriptions by the International Monetary Fund and neoliberal economists everywhere. But from the German perspective, this makes sense.

Opposed to this philosophy is that  the European Central Bank should  issue unlimited Eurobonds and flood Europe with money in an anti-austerity program.  The value of the euro versus other countries would plumet, and inflation would start. Germans' memories of 1920s hyperinflation make Germany maintain an iron stance against this second option. However, everyone agrees that Germany would bear the greatest burdens under this proposal -- probably sending that country into an economic tailspin.  And neither the  Germans voters or Angela Merkel want this to happen.

The third option is to let either Germany or Greece cut itself loose, and let the chips fall where they may.  However, go back to my statement on 1931.

I believe that the December 9th meeting will come up with a fourth option.  A former White House economist has stated that a controlled bankruptcy similar to Chrysler and General Motors for the EU crisis would not create panic.  While the European heads of state are not showing their cards, it's certain that the December 9th meeting will do everything it can to kick the can down the  road once more to avoid an immediate financial rout.

Several things have a high probability of happening at the critical December meeting.  One is that the International Monetary Fund will come forward with a plan to aid distressed European countries (most likely Greece and Italy, but also possibly Spain and Portugal) with participatory financing.  Of course, this will require further financial guarantees from the United States, China, India, Brazil, Canada, and other countries.  Under these circumstances, it will be necessary for both Europe and the US to diminish their power with the IMF, transferring part of their clout to the BRIC countries that provide financial aid.

Another, more interesting event is possible. It could be announced that Germany, France, and a few other small EU countries in good shape could form a subcompact within the EU to issue "superbonds."  The advantage of this is that only the most powerful EU countries would form this pact.  It would be to the exclusion of the 17 total countries in the EU or 27 countries in the Schengen zone.  Effectively, this would further enhance the power of France and Germany at the expense of all non-participants in the superbond scheme.  The superbonds would no doubt also act as a financing mechanism for countries in trouble, but they would impose all of the harsh, neoliberal/IMF medicine on the PIIGS.

No matter where we look in the world now (regardless of nationality or political/economic persuasion), there appears to be a general agreement that the euro as we know it is doomed.  Even Angela Merkel stated in her address in Berlin today that a resolution to the EU problem will take many years. And the global stock markets do their own gyrations by the nanosecond.

When it will happen, we don't know. We are still standing at the edge of the cliff, waiting for endgame.