Those loans are coming due for repayment in the next few years, and the local governments and their construction partners are in no condition to repay them.

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As their countries' bond yields rise, it becomes more expensive for governments to sell more debt, which leads to a vicious circle as the old debt comes due for repayment.

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Since some of this debt is due for repayment next year, the Bank of England has a deadline for deciding whether to roll it over into a perpetual zero-interest debt - which would be seen as, in effect, writing off the debt.

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The bad news is that 2012 is the year of greatest risk that a bloated bank or over-extended government will be unable to repay its debts - because it is a year when a frightening volume of the loans that were taken out in the boom years fall due for repayment.

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Now at that time of year, you wouldn't expect the banks to put all that net 191bn euros of new money to work in a proper sense: it will take time for that money to be used repaying the banks' own debts that fall due for repayment, or providing new loans to customers.

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The ecclesiastical loophole was that the Church allowed modest "compensation" over and above the amount due on a loan for the hazards and delays of repayment or any legitimate reason providing it was not intrinsic to the contract.

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