The 17 countries of the Eurozone formally backed a new deal for fiscal management, one designed to “save the euro” but which can only help if a host of other measures fall into place, including any plan to actually boost growth on the southern periphery.

We have a better sense of the situation in Europe, or at least the game being played by Angela Merkel and the European Central Bank, in tandem. Merkel and the ECB, before acquiescing to any scheme involving Eurobonds or running the printing presses, want to tighten fiscal integration among Eurozone countries, with the attendant loss of national sovereignty and real penalties for breaking fiscal guidelines.

Six central banks took coordinated action to ensure liquidity for the global banking system. The European Central Bank, the Federal Reserve, the Bank of England and the central banks of Canada, Japan and Switzerland will provide lending of dollars to banks to ensure they can cover operations.

As the Euro crisis remains unsolved, Europe is slipping into recession. The elites’ prescription for this, sadly, is more austerity. All we’re hearing are trial balloons about the IMF rescuing Italy, which have since been shot down. But that would be the ECB funding the IMF, in all likelihood, which it hasn’t agreed to do.

Silvio Berlusconi, the Italian leader whose government fell with pushing from Germany, France, and the central bankers, is now plotting his comeback but making sense: he’s saying the European Central Bank needs to do its job or the whole Eurozone will collapse — and he’s probably right.

In Spain, the Popular Party led by Mariano Rajoy scored a victory over the Socialists, due in no small part to the crisis ravaging the country with high unemployment and a collapsing housing market. But the new government is wedded to the same austerity policies that have already tanked the Spanish economy.

The problem for the United States is that there’s no understanding of how much exposure US financial firms have to the expected fallout, especially if there’s a default event. JPMorgan Chase and Goldman Sachs announced their overall derivatives risk from sovereigns today, but wouldn’t pinpoint how much of that comes from Italy or Spain.

The hoped for respite after new leaders were picked in Italy and Greece is gone. Italian bond yields have returned to the failsafe level of 7%, and Spanish debt yields are flying up almost as fast. And now France is feeling some pressure as the Euro union is under siege.

The Federal Reserve took no new action after its November meetings today, continuing on the same path, using some minor monetary easing and announcing that the federal funds rate will remain at its current level until at least mid-2013. Charles Evans of the Chicago Fed, who has been calling for a bigger intervention to maximize employment, bravely dissented from the left, becoming the first FOMC member to do so since 2007.

Greek Prime Minister Papandreou’s cabinet unanimously approved his call for a referendum on the proposed debt and austerity deal. It’s a way to pressure the creditors for more favorable terms or create the conditions for leaving the Euro.