Europe: Debt crisis 1, G-20 zero

CANNES, France (CNNMoney) -- The debt crisis in Europe continues to hang over the global economy after a summit of world leaders last week failed to produce any tangible new solutions.

The Group of 20 summit in Cannes, France, ended with broad promises from global heads of state to support economic growth and create jobs.

But the closed-door talks yielded scant details on the comprehensive plan the European Union agreed to on Oct. 27.

"Things are likely to get worse before they get better," said Mohamed El-Erian, chief executive of the giant bond fund Pimco (PTTRX), in an interview with CNNMoney's Poppy Harlow.

The Oct. 27 plan includes a series of measures to address the crisis, including debt relief for Greece, new capital requirements for banks and plans to build a financial "firewall" around vulnerable euro area economies.

Less than a week after it was announced, the plan was called into question following a controversial move by Greek Prime Minister George Papandreou.

Papandreou survived a confidence vote Friday, but the government in Athens remains in flux. By Sunday, he was making plans to hand over the reins to a yet-unamed new prime minister. Papandreou will meet with opposition leader Antonis Samaras Monday to hammer out the details.

Given the political uncertainty in Greece and Italy, investors expect global financial markets to remain volatile for the foreseable future.

Europe's worst case scenarios

Greece needs to secure its next installment of bailout money from the European Union and International Monetary fund before the end of the year to avoid default.

"There's a material risk that Greece may run out of money in the next few months," said El-Erian. The fear is that a disorderly default by Greece could send a giant shock wave through the globla financial system.

That could plunge Europe into recession and possibly drag down the fragile U.S. economy. But Greece isn't the only problem Europe must resolve.

So many ways for things to go wrong

Italian Prime Minister Silvio Berlusconi could also face a confidence vote this week as tens of thousands of protesters gathered in Rome over the weekend to decry his handling of the economy.

Berlusconi agreed last week to have the IMF "certify" the government's progress on fiscal reforms.

The move is designed to give investors confidence in the government's ability to force through unpopular measures such as a plan to raise the retirement age.

Italy has seen its borrowing costs rise to record highs recently amid concerns in the bond market about the government's ability to get its fiscal house in order.

Meanwhile, there is still confusion over the plan to build a financial "firewall" to prevent the problems in Greece from spreading to Italy and other euro area nations.

The European Union has proposed creating a special vehicle to attract private capital to the government-backed rescue fund known as the European Financial Stability Facility.

The goal is for emerging economies to help boost the €440 billion fund to upwards of €1 trillion. But the G-20 summit ended without any public commitment from China, Russia or any of the other nations that are seen as potential investors.

In response to a question about foreign investment in the EFSF, French President Nicolas Sarkozy said last week that "view points were coming together" among the Europeans and their allies.

Investors and Europe's trading partners have been calling for a decisive and coordinated response to the long-running debt crisis.

In its official statement, the G-20 urged "rapid elaboratin and implimentation" of the Oct. 27 plan. But EU officials have said repeatedly that the political process must be respected and implementing the measures will take time.

"I have said this many times before. This is a marathon, not a sprint," said Jose Barroso, president of the European Commission, in a press conference last week.

Stay tuned. This week brings a meeting of eurozone finance ministers in Brussels on Monday, followed by a meeting of all the European Union finance ministers on Tuesday.