Torn between the conflicting interests of its 17 constituent members, the European Central Bank is struggling to find meaningful responses. Far from managing to calm matters, it has succeeded only in further inflaming them.
Investors had been primed to expect intervention by the ECB in sovereign bond markets so as to prevent Italy and Spain going the same way as Greece, Ireland and Portugal, and that indeed is what Jean-Claude Trichet, the ECB president, appeared to sanction at his monthly press conference on Thursday.
But then it transpires that to the extent that there was intervention, it was confined to Irish and Portugese bonds, where the game is already up and bond purchases are going to make little or no difference.
After initial confusion over what precisely Mr Trichet meant in confirming resumption of the ECB's bond purchasing programme, investors responded accordingly. Up went Spanish and Italian spreads to levels which are now within a whisker of those that forced Greece, Ireland and Portugal to seek a bailout.
Matters were made worse still by the president of the European Commission, Jose Mauel Barroso, who in a letter insisted that the European bailout fund needed urgent reassessment only to be slapped down by German officials. Policymakers are at sixs and sevens, unable to agree the measures necessary to resolve the crisis. Italy and Spain are being abandoned to their fate.
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