Markets rally as both France and Germany put forward a plan to stop the Eurozone’s debt crisis from progressing any further.

Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy put forth a proposal that would severely penalize EU member states for not keeping a fiscally prudent budget in place. Countries like Greece and Ireland would be forced to implement austerity measures or face immediate penalties.

But without a doubt, Germany and France will need to push the European Central Bank to pick up some of the slack and print more Euros in an effort similar to Ben Bernanke’s policy of quantitative easing here in the United States. The European Financial Stability Fund (EFSF) will continue to grow larger as it buys sovereign debt and bank-owned debt.

Both the United States and the United Kingdom will be forced to accept this drastic bailout of Europe lest they worry about their own institutions. Both countries’ banks have relatively large exposure to European banks and debt. While Europe’s crisis is expected to be less severe than the 2008 crisis that plagued the U.S., systemic risk still persists.

S&P is said to be considering credit downgrades on a number of key European member states, including Belgium, Germany and Finland. Should Germany or France lose their key AAA ratings, there would surely be an epic disaster in both equity and bond markets worldwide.

Currently, the IMF is hard at work, dealing with the ECB and European nations in an attempt to curtail the crisis. It recently lent 2.2 billion euros in aid to an already ailing Greece. Greece has already received over 20 billion euros in aid as part of a 30 billion euro loan package to help.