Current events have more than a whiff of the lead up to the Lehman debacle and the recapitalisation of the UK banks. These two events should neatly encompass the range of potential outcomes of the current European procrastination.

There is a fundamental inconsistency in all of the policymakers' comments. On the one hand, they argue that the banking sector is adequately capitalised. At the same time, they insist that no debt write-off can be considered.