The denizens of the city have already started planning for their New Year celebrations. Where to go? How to travel? But one constraint which is looming in the minds of the planners is the ways to negate the city police that will be on the look-out for any untoward incidents caused by rash driving/riding and unruly crowd behavior at party venues. This will pose a major obstacle for the party-goers in an otherwise amiable environment. This understandable confusion can be linked with the confusion that is set on the minds of the general investors who despite some positive macroeconomic indicators from the world’s largest economy are having a negative outlook for investments in 2012.

While short-term indicators, such as consumer confidence, appear to signal the road to recovery, the longer-term issues remain shrouded in the smoke and mirrors of central bank money manipulation. From the perspective of someone who has keenly observed the global economics for a long time, he/she will see little reason to believe that the economic chaos will improve. In the meantime, there is holiday spending to cheer the general investors. From early reports, it appears that consumer spending in November and December was stronger than most forecasters had predicted.

American and European policy makers have shown an utter paralysis in tackling intractable economic problems. Unwilling to make the tough decisions they all should be enacted to avoid a looming global economic disaster, they have endlessly kicked the can down the road, while assuming that the road will move on forever. With an estimated $6 trillion plus solvency shortfall of the European banks and $16 trillion in US public debt, it will take some leadership of far greater caliber and astuteness to avert a looming disaster. Such leadership cannot be found at the moment.

As the seconds tick on, the euro is increasing the chances of facing a dangerous collapse. The euro is so clouded in doubt that investors are fleeing to the US dollar and US treasuries as a safe haven. This demand has created an illogical rally in the US dollar and Treasuries even as the major rating agencies have hinted an additional downgrades of US government debt. As the world’s second currency, its demise would herald unprecedented bank runs and financial chaos.

In 2011, politicians on both sides of the Atlantic had set their economies on a rendezvous with economic and financial catastrophe. If one assumes that no leader has the courage to face the music, then there can be little reason for optimism in 2012.