The euro zone has withstood several crises since 2008 centered on its fractured economy, bond market, banking system and, of course, Greece. But for financial markets, the biggest test may be to come. Julian Satterthwaite reports.
After Brexit and Trump, you'd think next year might be a calmer one for markets. Maybe not. Some investors think the next 12 months could be even more testing. And Europe is top of their risk list. (SOUNDBITE) (English) JAMIE MCGEEVER, REUTERS MARKETS CORRESPONDENT, SAYING: "Politics, politics, politics. 2017 sees elections in the Netherlands, Germany and France, and possibly, depending on how next month's referendum goes, in Italy too. And if 2016 has shown us anything, it's always expect the unexpected." In France national front leader Marine Le Pen is riding high in the polls. She wants to follow Brexit with Frexit. An Italian election could see the Five Star Movement make big gains. It wants to take the country out of the Euro. And in Germany the populist AFD party is making big gains by exploiting anger over Angela Merkel's open door for migrants. It all has some traders betting the EU itself could be on the brink of collapse. They're selling off debt perceived as vulnerable to any shock: (SOUNDBITE) (English) JAMIE MCGEEVER, REUTERS MARKETS CORRESPONDENT, SAYING: "The obvious one, and it's what investors are playing, is selling Italian government bonds and buying German government bonds. Hedge fund manager Hugh Hendry, the outspoken hedge fund manager, has said that investors are looking to next year and playing the european blow-up trade, and a central part of that trade is through the Italian bond market." Equities soon recovered after the intial shocks of Brexit and Trump. The EU, and the euro, have also survived many a crisis. Many expected the single currrency to collapse in 2011, at the height of the euro zone debt crisis. But the political will was there to keep it going. That determination is likely to be tested again.