After months of waiting, we just received the results of the assessment of the health of Eurozone banks by their new supervisory authority: the European Central Bank. They were predictable, but the exercise has limitations.
The European Central Bank is the one entity that is theoretically free to make an "independent" decision about what it is to do, as it is not directly controlled by other governments or the European Union administration and parliament.
Today, the ECB announced that, as speculated by the markets, it would purchase bonds of Italy and Spain, in order to reduce financing costs. Yet, the markets were disappointed. There are three reasons why this disappointment was almost predictable.
However, in contrast to what passes for the economic wisdom of today, an increase in the rate of sovereign bond yields would be a function of deterioration in their credit, currency and inflation risks. But it would never be because of an increase in the prospects for growth.
Over the 14 ½ Summits of the European leadership since the beginning of the Greek crisis, very little has been actually decided. In order to avoid a further and catastrophic deterioration of the precarious situation of its public finance, action must be the absolute priority.