Prime minister David Cameron vetoed EU treaty changes that would reign in budgets for member nations prompted Christian Noyer, chairman of the French central bank, to say credit rating agencies should downgrade the U.K. before they downgrade France.

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The optimists' gloss on all that was that Italy's financial woes are being quarantined - and the rest of the eurozone is galloping towards the kind of fiscal integration that would (at the last) allow the European Central Bank to (in effect) underwrite the credit-worthiness of all member states (see my post, The eurozone's borrowing costs may stay lethally high, for more on this).

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W. Tucker , executive director and member of the Monetary Policy Committee of the Bank of England, warned a week ago that the exponential growth of credit derivatives has resulted in a backlog of confirmations between dealers, meaning that transactions have not been recognized in writing.

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