Accompanied by the familiar, clanking sound of a can being kicked once more down the road, eurozone leaders return home today after an all-night session in Brussels which has stopped a threat to the common currency. For now, at least.
Cyprus, lumbered with huge debts which threaten to overwhelm its banking sector and the country's entire economy, has agreed to a tough deal which will seize deposits in customers' accounts in two banks to contribute towards paying off those debts.
The successes of the past week's sometimes frenzied negotiations are the protection of sums below €100,000 - these were going to to be taxed under an original plan revealed last Monday - and the survival of Bank of Cyprus, the country's largest lender, after threats that it might be closed down.
The financial industry on the island has nevertheless suffered a mortal blow. Many Cypriots, individuals and companies will lose huge sums stripping customers of any faith that money left with the banks is safe.
Meanwhile, fleets of executive jets are reported to have flown into its airports, owned by rich foreign depositors anxious to get their money out. Morgan Stanley estimates up to a fifth of cash in accounts is Russian, attracted by a low tax, no-questions-asked regime. Whatever remains after the levies is likely to be moved to banks in Switzerland, London and elsewhere.
But the failures reach far wider than Cyprus and touch at the very foundations of the single currency. Deposits up to €100,000 are supposed to be backed by a state guarantee in every eurozone country. Although that protection eventually survived in Cyprus, for a while it looked as though the government would take a proportion of all deposits. The next time there is a crisis in another country - and there will surely be more crises - depositors can no longer be sure their own government will protect them. At the very least that government will have to work all the harder to convince them not to rush to withdraw any money in their accounts - a bank run.
Furthermore, the threat by the European Central Bank to withdraw emergency lending to Cyprus which could have pushed it out of the euro has undermined the pledge made last summer by the ECB's president, Mario Draghi, to do "whatever it takes" to save the single currency. Membership is still, in theory, a one-way ticket. As soon as one country leaves and converts euros in its accounts to a new currency, it means others could follow. Again, that would demolish confidence that money is safe. An exit has been avoided this time but doubts remain.
Finally, events of the past week emphasise how the fate of the largest countries, like Germany, are linked to that of the very smallest, like Cyprus. There are many problems bubbling under in the eurozone, neatly summed up this morning in a note by Bill Blain, a bond specialist at Mint Partners in London:
"Markets are differentiating the component parts of the Euro crisis - and are highly cogent of the unique melt-down triggers in each Euro-state:
- In Spain its banks, property, and regional debt, with a threat of social instability from unemployment and associated factors.
- Italy is all about political will to restructure the economy to create real growth - the fact there is no government isn't that big a deal yet. (It will become so if Berlusconi gets back in, Grillo is forced to take policy decisions, or nothing happens to move forward reform.)
- Greece is about the next funding crisis, the next set of missed targets and how much pleading will be required to secure the next bailout.
- Portugal is about a gallant country struggling with impossible odds to turnaround the economy – while its efforts to reform and restructure should be rewarded by another bailout, it may fall victim to German reluctance.
- Ireland is about smoke and mirrors... poster boy of the crisis, yet the banks remain mired in high NPLs (non-performing loans) and negative equity loans. We get told how well the economy is doing, but that’s largely on the back of tax-efficient P&L booking by multi-nationals rather than the Celtic kitty-cat’s recovery. A few Dubliners finally buying homes at knock down levels does not represent a property boom let alone a recovery!
- France (yep, include them in the European litany of doubt) is all about unwinding the tortured interface between State and Industry and creating an entrepreneurial economy – something its failed to nurture since... well the invention of economic history."
The men and women at the helm in Europe have so far excelled not in solving the problems but in finding ways of defusing crises at the last minute. This is, perhaps, the genius of a system which tries to reach agreement among so many leaders with such diverse demands. But it is an exhausting way to run things and the hollow, clattering theme tune of cans being kicked goes on.