Greece and Italy will default on their debts in 2012 but will not abandon the eurozone, as the continent's policymakers will find away to keep the currency zone from falling apart, says Byron Wien, Vice Chairman of Blackstone Advisory Partners.
U.S. stocks will rise in 2012, with the S&P 500 broad index of stocks surpassing 1400, up from current levels of around 1277, while U.S. unemployment rates will dip below 8 percent and oil dropping to $85 a barrel.
Many economists have pointed out that if Greece defaults on its debts, it will be forced to abandon the euro, which would pressure bigger countries like Italy to follow suit.
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That's not etched in stone, Wien says, pointing out policymakers will find a way to allow debt-ridden European countries to restructure their debts in a way that doesn't kill the currency zone as it exists today.
"Europe has much too much to lose if the European Union dissolves," Wien tells CNBC.
Furthermore, 2012 looks great for the U.S.
Unemployment rates will fall to below 8 percent from their current levels of around 8.6 percent, growth will top 3 percent, and oil prices worldwide will fall to $85 a barrel, down from over $100 today, thanks to greater extraction of shale and rock deposits in the U.S.
"Extraction from resources in the U.S. is going to be a game changer," Wien says.
European countries have remained committed to working through their debt problems and sticking with the euro.
Greek Prime Minister Lucas Papademos has said a messy default could come by March if the country didn't strike finance agreements with a troika of the European Commission, the European Central Bank and the International Monetary Fund and work out an exit strategy from the crisis.
"In mid-January, talks begin with the troika which focus on shaping a credible economic adjustment plan for 2012 to 2015," Papademos tells business leaders, according to Bloomberg.
"The implementation of the agreement to reduce the debt and continuation of financing of the country depends on that. Without this agreement with the troika and subsequent financing, Greece in March faces the immediate risk of a disorderly default."
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