Grim headlines about economic crisis in the eurozone hide the fact that some European countries and companies still promise good returns on investment.
Remember Europe's bright spots
Those proud Europeans have suffered some hefty blows to their pride since the early days of the credit crunch.
After snootily blaming US-style cowboy capitalism for the crisis, European Union politicians soon discovered that European banks had also taken a costly walk on the sub-prime wild side.
This harsh reality was swiftly followed by the eurozone sovereign debt crisis, when it emerged that Greece was running a 15 per cent deficit and public debt of 125 per cent, and had fiddled its books when joining the single currency in 2001. Europe has lurched from crisis to crisis ever since, with contagion threatening Ireland, Portugal, Spain and Italy, and even Belgium and France. A "shock and awe" €750 billion (Dh3.6 trillion) bailout package in May failed to calm markets, and eurozone woes flared up again in November when EU leaders had to find another €85bn to bail out Ireland.
The crisis rumbles on, sinking markets, destroying credit ratings and sparking riots. Austerity plans are only making matters worse. More and more people are saying the unsayable: that at least one country will have to default on its debt, while the UK-based Centre for Economics and Business Research gave the euro a one-in-five chance of surviving in its current form.
The eurozone poses one of the biggest threats to the global economy in 2011. Surely you would be crazy to invest here? Maybe not.
There are 27 countries in the EU. Just 16 of them have joined the single currency, and one of these is a global economic powerhouse. No prizes for guessing who: Germany.
While the peripheral eurozone states grow sicklier by the day, Germany is slimmed down and fighting fit. It has spent the past decade squeezing costs and wages to compete with emerging markets, and is now reaping the benefit.
"Europe, especially Germany, is in better shape than people think because the negative headlines are drowning out any positive news," says Fatima Luis, co-manager of F&C Strategic Bond Fund, which invests in corporate bonds.
Behind the headlines about sovereign debt fears, major European companies are in good health.
"Europe could surprise the markets in 2011, due to the significant divergence in outlook between its member states. Parts of Europe are performing very strongly and benefiting from the weaker currency, particularly Germany," Ms Luis says.
Germany is the world's second-largest exporter after China, and ahead of the US and Japan. Its budget deficit is less than 4 per cent of GDP (compared to around 9 per cent in the US and 11 per cent in the UK), and it is running a current account surplus of 5 per cent. Inflation is under control. Unemployment has just hit an 18-year low.
It now accounts for 20 per cent of the continent's GDP. It runs a roster of big-name international companies, including Bayer, BASF, BMW and Mercedes Benz, and its manufacturing-order books are swelling by the day.
Best of all, it has a competitive currency. If you're Greek, Irish, Spanish or Italian, the euro is overpriced. If you're German, it is nicely undervalued. In the current turmoil, the deutschmark would have been a safe haven if it hadn't been bundled together with the peseta, lira and drachma. Germany's exports would also be a lot more expensive.
You can never write off the Germans, but you can invest in them, using a low-cost type of tracker called an exchange traded fund (ETF), such as the iShares MSCI Germany Index Fund. Alternatively, the mutual fund Henderson Euro Trust is 30 per cent invested in Germany, and has returned 45 per cent over the past five years.
The danger is that Germany could end up picking up the tab for southern European profligacy, but it seems unlikely that the voters will stand for that. Bailing out East Germany was expensive enough.
But Europe isn't just Germany. It also has Switzerland, says Fiona MacRae, fund manager at the Alliance Trust European Equity Fund.
"We are seeing a two-speed Europe. There is a strong centre led by Germany, filtering out to a much weaker periphery. Our fund has benefited from being overweight in German and Swiss markets. For example, Swiss agri-business Syngenta look set to play a crucial part in the global need for efficient crop production, and has a long-term global reach."
Switzerland boasts other strong global companies, including Nestlé, pharmaceutical firms Novartis and Roche, and financial services companies Credit Suisse, UBS and Zurich.
In France, it is worth pointing out that they can also muster Air France, banks Crédit Agricole and Société Générale, and Renault.
Europe is so unpopular among investors that now could be a good time to invest there, says Mark Dampier, head of research at UK-based independent financial advisers Hargreaves Lansdown. "It could be the perfect contrarian move. European equities are quite cheap because so few people want them right now, yet the continent boasts some top global companies."
Brave investors might want to time their entry into Europe at the moment of maximum fear, when share prices will be low and there are bargains to be had, says Steve Gregory, managing partner at financial services company Holborn Assets in Dubai.
"I still believe the euro will survive, but it may fall in value significantly. If it drops against the dollar, this could be a good opportunity to buy European stocks, as you will get more for your money."
Mr Gregory anticipates further eurozone shocks, but points out that European companies are posting very positive results, with profits up 35 per cent in the past year.
Figures recently published by the European Commission show signs of hope. The eurozone area has grown by a "better than expected" 1.7 per cent in 2010, and this should rise to 2 per cent in 2011.
Unemployment and public deficits should also fall. Spain is the biggest worry. It owes more than Greece, Ireland and Portugal put together and needs to refinance almost €300bn of debt in 2011.
Spanish borrowing costs recently hit a 10-year high, and in December, Standard & Poor's cut its credit outlook from stable to negative.
If contagion spreads to Spain, this might be a good time to be holding dollars, Mr Gregory says.
"The dollar typically strengthens in a crisis. It has recently picked up, even though the Federal Reserve has been flooding the market with billions of dollars in the latest bout of quantitative easing."
A stronger dollar may be good news for UAE residents, by strengthening their buying power and making imports cheaper, but it will be bad news for many companies because it makes their exports more expensive, Mr Gregory says.
Not every European country is in the eurozone, of course. The UK isn't. Nor are Sweden, Denmark and Norway. The UK's troubles have been covered in depth, but Sweden is booming, with anticipated growth of 4.6 per cent in 2010, while oil-rich Norway appears to have escaped the global downturn altogether.
And then there is emerging Europe. Russia appears to be great opportunity for "bold" investors, says Spencer Lodge, regional director at financial brokerage PIC, a wholly-owned member of deVere Group.
"It is one of the cheapest global stock markets, with valuations at a relatively low eight-times earnings. Sentiment can only improve now that it is hosting the Fifa World Cup 2018. Mutual funds such as JP Morgan Russia or Baring Russia have returned more than 20 per cent in 2010, although we wouldn't recommend you invest more than 10 per cent to 15 per cent of your portfolio in this higher-risk area," he says.
Europe is a tale of two continents.
It is a story of high-speed core Europe and the fiscal train wreck on the periphery, of successful global corporates and disastrous public finances. We can expect plenty of further twists, but this story should ultimately have a happy ending, says Stephen Macklow-Smith, portfolio manager within the European behavioural finance team at JP Morgan Asset Management.
"European companies have transformed themselves over the last two decades, driving consistent market outperformance. Worries about deflation and sovereign debt defaults, as well as the chances of Europe suffering a Japan-style lost decade, all appear overblown.
"Europe is not the new Japan."