Watching the 'sausage making' of a Eurozone rescue plan in real time has done little to assuage our belief that the results will be compromised and inadequate to the task. This, the bar is set low. However, even without consensus on some big issues by principal participants - France and Germany - we take some consolation from the almost universal agreement among European (and global) policymakers that a Lehman-like failure of one or more of the Eurozone financial institutions should be avoided at all costs. Furthermore, and perhaps more importantly, European policymakers have the ability to prevent such an outcome, especially if the European Central Bank's (ECB's) recent willingness to utilize its balance sheet continues. Although the details of allocating losses remains under discussion - loss allocation is always politically contentious and the leaders of the ECB think that this is the purview of fiscal authorities - we increasingly believe that the ECB (and others) will ultimately do what it takes to preserve the integrity of the banking system. In short, we think investors can take some comfort that although the process is still subject to considerable uncertainty, the eventual goal of financial stability is not.

David Fuller's view The key for markets elsewhere which have been under the shadow of Europe's problems, is not when this crisis will be resolved. That will take many years, as we know. Instead, the important question, as I have mentioned before, is when will Europe's dilemma lose its capacity to shock?

My answer is when most investors see evidence that Europe's leaders have grasped the proverbial nettle and are moving in the right direction, however incrementally. I think we have reached that point although there will be periodic setbacks along any political and economic path.

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