The markets took another hard hit today following the abrupt resignation of Jürgen Stark, Germany’s member of the European Central Bank’s board. The euro hit six month lows against the dollar, bank stocks tumbled five percent, the Dow was down 3 percent, and the FTSE All-World index fell 3.07 percent amid near certainty that Greece would default on its debt and send anothe

Four years into the financial crisis, it is becoming increasingly clear that the biggest deficit is not in credit, but credibility. Markets can adjust to a downgrade of global growth, but they cannot cope with a spiralling loss of confidence in leadership and a growing sense that policymakers are disconnected from reality.

It is an old cliché that the European Union only advances in the wake of a crisis. Recently though, it has seemed like every time the EU takes action its response is deemed too little too late.

Evidently there is now a considerable debate out there about the famous (or should that be infamous) CEBS stress tests. Methodologically all sorts of weaknesses have been identified, but in many cases these are decidedly beside the point. It is important to be aware what the tests were (and weren’t) designed to show.

“The debate in Germany over Greece is polluting the atmosphere and creating anti-European feeling,” charges former Belgian prime minister Guy Verhofstadt.   “In the space of a few weeks, we are destroying all our efforts to bring Europe closer together,” he laments.

The introduction of the euro in 1999, it was claimed, would narrow the economic differences between the member countries of the monetary union.

UK

In the UK, RBS became the latest bank to be taken over by the government as a result of the financial crisis, according to IHT: