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Europe and the euro start 2012 in the spotlight, as economists around the globe watch to see how policymakers fight what appears to be an oncoming recession. Count the Wall Street Journal 's top editors and reporters among those who see Europe struggling throughout the year. The Journal's multimedia team has put together an impressive--if at times rather gloomy--documentary titled Europe on the Brink . The doc moves from the establishment of the EU and what some WSJ editors see as basic structural flaws to the EU economy, to the beginning of the debt crisis, and through to today's challenges.

Leaders from the world's biggest economies are getting together in Cannes this week for a G20 summit , and they are hoping to repeat the success of the 2009 G20 summit in London where they faced down a severe global financial crisis. Simon Johnson , former chief economist for the IMF, warns us not to set such high expectations this time around. Writing at Economix , Johnson explains how the conditions are quite different this time: In 2009, the primary problem was slumping economies in the United States and Western Europe. It was in the perceived individual interest of those economies to engage in some fiscal stimulus – and they were happy to present this as a joint approach. China was also willing to stimulate its economy, as its policy makers feared that slowing global trade would reduce Chinese exports. President Obama’s appeal for fiscal stimulus around the world was pushing on an open door. Now the issue is quite different. We have a sovereign debt crisis within the euro zone, in which countries that have borrowed heavily are facing the prospect of restructuring their debts. The euro zone summit meeting last week established that Greek debt would fall by about half (relative to face value), although this does not clearly put Greece onto a sustainable debt path. Prime Minister Andreas Papandreou announced a plan on Monday for a referendum on the plan, a move with the potential to build political support for the needed reforms, and on Wednesday his cabinet offered its full support. But another outcome — if the government does not fall in the meantime, making the referendum plan moot — could be a Greek exit from the euro and a default on its debts in disorderly fashion, without any kind of international framework or outside financial support. But the real issue is Italy, as it has been at least since the summer. The Europeans are only beginning to come to grips with the centrality of Italy in the European debt web – glance at Bill Marsh’s recent graphic to get the point. Italy has more than 1.9 trillion euros in debt outstanding; this is the third-largest bond market in the world. In the aftermath of the Greek referendum announcement, the yield on Italian debt rose above 6.1 percent. The standard view is that if this reaches 6.5 percent, Italy will need to seek assistance in the form of a backstop fund to guarantee there will be no default. Ultimately, Johnson believes Europe must go through some major restructuring--"the equivalent of a constitutional convention." And that takes time. Read The European Debt Crisis and the G-20 Summit Meeting here .

Alistair Darling was the Chancellor of the Exchequer when the Global Economic Crisis hit, and he was tasked with rescuing Britain's banking system. Now he argues that further banking reforms are necessary to prevent another crisis. He spoke about that need, and the state of the global economy today, when he sat down for Tea with the Economist :

Dublin-based RTE reported yesterday that the EU and IMF bailout package for Ireland's ailing economy will total 85 billion euro. Standard and Poor's lowered Ireland's bond rating from AA to A . And now the euro has fallen to two-month low against the dollar. Bad news for Ireland and the Euro-zone. But also bad news for the US, says Brookings Senior Fellow Martin Baily , who sees instability in Europe as a real threat to US recovery: For more of Baily's analysis of the impact of European struggles on US recovery, click here .

Ireland's economic policymakers have taken another hit in their efforts to right the ship. Moody's is downgrading the country's bond rating from Aa1 to Aa2. The BBC reports: Ireland has suffered a severe contraction in GDP since 2008, causing a sharp decline in tax revenue. And Moody's said the banking and property sectors, which had driven the economy before the global economic downturn, would not contribute strongly to overall growth in coming years. It also pointed to the country's swelling levels of debt as a reason for the downgrade. Read the report here .

Following the earlier post today on the European Central Bank's concerns over debt in the Euro-zone, we thought we'd direct your attention to a simple but helpful interactive map from Radio Netherlands . The map shows the relative debt worries of countries Radio Netherlands places in the "danger" category. Click here to use the map and scroll over each country for information on possible debt reduction measures.

0.1. Not a very imposing number. But the very fact that it is 0.1 and not -0.1 or even 0.0 is the key. Because in the lat quarter of 2009, Britain experienced 0.1% growth. And that means the UK has finally joined the US and the other major economies in exiting recession. Here's a map from the Guardian that marks European nations that have exited recession at this point: Use an interactive version of the map at The Guardian by clicking here . The Guardian's Ashley Seager points out that the figures are disappointing and lower than economic forecasters projected. And while the announcement brings about a sense of "relief," he is bracing for a slow and difficult recovery: That is not to say that the first quarter could not bring a nasty surprise and show contraction again, as has often happened at the tail-end of previous recessions. Indeed, we always need two consecutive quarters of contraction to say we are in recession . It might be safer to wait for a positive first quarter figure to declare this one definitely over. The question is, though, where do we go from here? The answer is, hopefully, upwards. But in truth the recovery could be a slow, protracted affair . The consumer is still weighed down by debt, and unemployment, though seemingly topping out, is still very high. Household finances are also going to get squeezed by a fiscal tightening that will begin some time after the general election. Remember, too, that the banking system remains extremely fragile and banks largely unwilling to lend. The conditions don't look to be in place for the sort of V-shaped rebound that the economy has seen in the past after recessions. Read Recession's over but we're now out of the woods yet here .

Strange bedfellows--France and Britain; Gordon Brown and Nicolas Sarkozy . But they agree that European cooperation a year ago helped stave off greater economic calamity. And the British Prime Minister and the President of France write together in today's Wall Street Journal that they, and European leaders, "need to once again lead the way in forging a new global consensus." This crisis has made us recognize that we are now in an economy which is no longer national but global, so financial standards must also be global. We must ensure that through proper regulation, the financial sector operates on a level playing field globally. There is an urgent need for a new compact between global banks and the society they serve: A compact that recognizes the risks to the taxpayer if banks fail and recognizes the imbalance between risks and rewards in the banking system. A compact that ensures the benefits of good economic times flow not just to bankers but to the people they serve; that makes sure that the financial sector fosters economic growth. A compact that ensures financial institutions cannot use offshore tax havens to negate the contribution they justly owe to the citizens of the country in which they operate—and so builds on the progress already made in ending tax and regulatory havens. Therefore, we propose a long-term global compact that will encapsulate both the responsibilities of the banking system and the risk they pose to the economy as a whole. Various proposals have been put forward and deserve examination. They include resolution funds, insurance premiums, financial transaction levies and a tax on bonuses. Read For Global Finance, Global Regulation here .