European banks struggle to save the world.
IT HAD seemed a simple enough wheeze. Give banks unlimited access to 3-year funding from the European Central Bank and it wouldn’t take much more than a nudge and a wink for them to buy the bonds of Europe’s troubled peripheral countries instead of having the ECB do the job itself. For those too dull to read between the lines, Nicolas Sarkozy, France’s president, spelled it out: “each state can turn to its banks, which will have liquidity at their disposal.”
The wheeze, however, seems to have been too clever by half.