It's hard to see how things can get much worse as far as the world economy, sovereign debt, and the continued tottering of the euro.

But hold on to your hats; there are many analysts and leaders who say that 2012 has the potential for being even worse.

Financial Times:

Europe's leaders warned 2012 was likely to be tougher than 2011, when spiralling borrowing costs forced political change in Italy and Spain and threatened the survival of the euro.

In a sombre address on national television Nicolas Sarkozy, president of France, said the gravest crisis Europe has faced since the second world war "is not over" and Angela Merkel, German chancellor, told German voters "next year will no doubt be more difficult than 2011".

[...]

Speaking on national television on Saturday, Ms Merkel said Europe was experiencing its "harshest test in decades" but would ultimately be made stronger by the crisis.

Mr Sarkozy, who is facing a tough re-election campaign later this year, said French voters were more anxious at the end of the year than they were at the beginning.

"This extraordinary crisis, without doubt the gravest since the second world war, is not over ... you are ending the year more anxious for yourselves and your children."

We are likely to find out rather quickly just how bad 2012 could be. In a couple of weeks, the first of several bond sales by Italy will commence - a total for the first quarter alone of over $115 billion - and there is fear that investors will drive the cost of borrowing beyond what Italy can pay.

Greece, also, is facing an uncertain year as austerity measures begin to make life painful for most of the country.

Either one of those nations could still precipitate a crisis that could push the world economy into a severe recession - or worse.

Then there is the prospect of war with Iran and the unknown consequences that would ensue. There are also unanswered questions about whether the Syrian uprising will spread, what might be the consequences of a Muslim Brotherhood government in Egypt, and the chance that Iraq will disintegrate into sectarian violence again.

What might happen in South America if Hugo Chavez were to die? Can Mexico successfully battle the drug cartels and prevent the violence from increasing in America? And what about China's economy and the real estate bubble that is just now beginning to burst?

As for America, can Obama survive the worst economy in several generations and win re-election?

The potential for catastrophe is actually greater in 2012 than it was in 2011. Whether world leaders can manage these numerous crisis and potential crisis and bring us all safely through to celebrate the advent of 2013, or we will continue to muddle through, kicking the can down the road and go into next year no better off - or worse - than we are now.

That's the choice facing all of us and its hard to be optimistic.