I spent the best part of last week trying to figure out the mechanics of the eurozone’s €440bn ($587bn) bail-out fund. The exercise reminded me of my research into the credit market, with its promises of credit enhancement and other logic-defying concepts. The European Financial Stability Facility is in many respects like a gigantic collateralised debt obligation and uses much of the machinery of modern finance.

But there is one important difference. In the days of the credit bubble, there was some ultra-cheap credit at the other end of a long CDO cash flow chain – subprime mortgages, for example. In the case of the EFSF, the situation could not be more different. Greece was very lucky to get into trouble before the EFSF was set up and was able to obtain its first €20bn loan tranche at an interest rate of about 5 per cent. This was calculated on the basis of a cheap money market rate, plus a small administration fee and a lending margin.

I cannot see how the EFSF can offer similarly attractive rates. We are not yet in a position where it would make sense for any country, not even Ireland or Portugal, to borrow from the EFSF.