So far, political courage has been in short supply. Germany, which holds the key to the crisis, has for the past three months been bent on an entirely counter-productive campaign to impose losses on private-sector holders of Greek government debt. The looming prospect of a Greek default has predictably destabilised the entire eurozone bond market. Moody's last week specifically attributed its decision to downgrade Portuguese government debt by four notches to a junk rating to the eurozone's apparent new policy of imposing losses on bondholders as a first rather than last resort. Similar concerns lie behind the precipitous loss of confidence in Italy this week.

Monday's statement by eurozone finance ministers offered scant comfort. Most commentators concluded that it showed Member States remain as confused and divided as ever. Although ministers talked for the first time about expanding the size and scope of the European Financial Stability Facility, they provided little detail and no action—and crucially didn't rule out a Greek default as they have on previous occasions. In short, ministers appeared to be doing the bare minimum and ducking the hard decisions.

The solution to the eurozone crisis already exists. Graham Bishop, an independent analyst of European financial affairs, points out that for much of the past year, the European Council, which consists of European heads of government, has been blocking adoption of Europe's proposed economic governance reforms. Most of the details of the new arrangements, known as the "Six Pack" and designed to replace the discredited Stability and Growth Pact, have been agreed with the European Parliament. Just one issue remains outstanding: France and Germany won't accept a proposal stipulating that only a qualified-majority vote could overturn a European Commission ruling that a Member State is in breach of the rules.

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