Will the Euro Collapse in 2010?

(Euro story updated for events in Europe on Tuesday and Wednesday)

NEW YORK (TheStreet) -- Covering the Greek debt crisis and the slide in the euro in 2010 has been like monitoring a schizophrenic's state of mind from minute to minute. When the Spanish prime minister said on Tuesday that rumors of Spain's demise were "complete madness" he picked the right term to describe the situation in Europe.

One day, a bailout package is a "sure thing" and fears that Europe is sinking deeper into its debt mess ease. Then the next day, political resistance makes a bailout package for Greece look "unlikely" and sends the markets tumbling. The European debt Chicken Little has had its head cut off and reattached so many times during 2010 that even if it were free range it wouldn't be a very happy poultry ambassador of the economic apocalypse.

The equity markets lost $1 trillion in value on a single day last week, Wednesday, and that massive selloff was repeated on Tuesday, with a $1.1 trillion loss in the equity markets, on fears that the European debt crisis would derail a recovery in Europe and edge the global markets into a major correction.

The MSCI World Index saw all of its 2010 gains wiped out on Tuesday, and the situation on the streets of Greece was turning very ugly, with at least three people reportedly killed in the protests against the austerity measures that the Greek government is attempting to implement as part of controlling its massive debt.

Noted market prognosticator Nouriel Roubini -- who predicted the U.S. recession a year ahead of its actual occurrence -- stoked fears of a global contagion stemming from the European debt crisis when he said last week at the Milken Institute Global Conference, "Greece is just the tip of the iceberg, or the canary in the coal mine, for a much broader range of fiscal problems."

By Tuesday, the fears about Greece's woes had morphed into the most widespread fears that it was no longer just about Greece, but a debt contagion spreading across Europe, with Spain and Portugal next on deck to wreak havoc with the markets by way of their debt.

Day to day, it's hard to keep track of all the noise related to Europe's woes. Greek labor unions balk at a bailout; German politicians dilly-dally on their big role in approving a bailout based on domestic political pressures; and some market economists argue in favor of allowing Greece to default rather than seeing through an expensive bailout package.