"Re: "When will this crisis lose its capacity to shock?" I fully agree that this is the key question, since the crisis itself is not going to go away. You might be interested in the attached report for the European Securities Network, which touches on this and some related issues."

David Fuller's view Many thanks for your excellent Strategy Update - "What can the EU and G20 do to stop the rot?" This is certain to be of interest to many subscribers. Here is the conclusion:

In conclusion, the Eurozone debt crisis is nowhere close to going away in the fundamental sense of the imperative it creates for ongoing progressive retrenchment in the "PIIGS" economies. Any hopes for a "magic wand" solution with Eurobonds and fiscal union are unrealistic. The best we can expect is that its peak negative impact on equity markets has now been seen, given the evidence from history that markets discount a debt crisis and then move on, long before the crisis itself is resolved. The demonstration effect of adequate potential funds availability from within and without Europe is of central importance to this in limiting the contagion to the key sovereign bond markets of Spain and Italy. Yet the imperatives of politics and moral hazard dictate that the availability of funding must remain highly conditional on ongoing progressive retrenchment, and that any persistently erring economy would in fact be cut adrift from funding. So the real challenge for the authorities is to confront the inevitable reality by demonstrating adequate funds availability for conforming economies while also demonstrating that the system (i.e. the economy, the financial system and the Euro single currency project) could in fact survive the cutting adrift from funding (and likely related sovereign default) of any member that persistently deviates from fiscal targets. A more aggressive policy to redouble the rate at which competitiveness is rebalanced between the "PIGS" and other Eurozone economies would also help to allay fears in markets that the retrenchment demands on the former will prove too much to bear.

I think subscribers will also be interested in the accompanying historic graph showing previous financial crises commencing with Continental Illinois' failure during the Latin American debt crisis in 1984. I commend it to you.

Some will say that it is different this time. They are right in some respects, not least being that this is a bigger crisis. Nevertheless, it is not insoluble and I would not bet against the chances of a combined EU/International rescue succeeding over the longer term.