The evolution of the crisis has, however, thrown European banks' balance sheets into sharp focus. Eurozone governments have proven unwilling, or unable, to produce a solution that persuades markets that they are on top of the problem.

It seems inevitable now that either the eurozone will have to contract, with parts of the uncompetitive periphery dropping out, at least for a time, or that member countries' debts will have to be collectively guaranteed, which implies some form of fiscal union.

The political problem is that the second solution cannot yet be sold to German voters, let alone to France's National Front and Finland's True Finns. Perhaps it will be possible to persuade the Germans if the alternative is eurozone collapse, which would put the Deutschemark, or a Northern Euro, in the uncomfortable position that the Swiss franc occupies today - too strong for its own good. But things might have to get worse before the political mood swings.

In the meantime, the European Council continues, as the Americans would put it, to "kick the can down the road." Of course, the can is not in the road; it is in the banking parlors. EU banks are holding sovereign debt that clearly is not worth 100 cents on the euro. But even the financial "stress tests" conducted by regulators did not require the banks to acknowledge that inconvenient truth.

Many eurozone banks have made far less progress in strengthening their capital adequacy and liquidity than have American and British banks since the financial crisis erupted. The disparities were exposed in the IMF's last Global Financial Stability Report, published in April, which contains a striking analysis that shows the changes in tangible common equity over the last two years, and the degree to which banks are reliant on wholesale funding. One EU central banker described this to me as the "killer chart."

What it shows is that banks in the United States have increased their equity from about 5.5 percent to about 7.5 percent, and have reduced their reliance on wholesale funding from 30 percent to 25 percent. British banks have made less progress with tangible common equity, rising from just under 3 percent to a little over 4 percent, but they have reduced their reliance on wholesale funding, from almost 45 percent in 2008 to less than 35 percent now.

By contrast, eurozone banks have almost stood still on both indicators.

That is why continuing uncertainty about the integrity of the eurozone, and the value of its members' sovereign debt, is proving so damaging to its banks. In 2007-2008, the sins of the bankers were visited on the politicians; now the reverse is true. Perhaps there is a difference: the bankers' sins were sins of commission, while the politicians' sins - repeated failed efforts to produce a solution to match the scale of the problem - are sins of omission. But the consequences are equally grave.

I have assumed that the Germans would eventually recognize that their interests lie in preserving the eurozone intact. As Churchill said of the Americans, "you can always rely on them to do the right thing ... once they have exhausted all possible alternatives."

The Germans have now almost run out of alternatives. If they do not do the right thing soon, there will be some banking casualties, and European governments will once again be obliged to put in public money.