The most disturbing aspect of the eurozone right now is that every crisis resolution strategy depends on a moderately strong economic recovery. The Greek programme was in trouble when it was agreed six weeks ago. All the official forecasts were wrong. The country is in depression, and its debt dynamic is “out of control”, says its new fiscal council. In Italy, the central bank is concerned that the country’s austerity programme was having recessionary effects.

The European bank recapitalisation strategy – if you want to call it that – is also collapsing under the weight of the economic downturn. Last week saw a heated dispute between the International Monetary Fund and the eurozone governments over how much banks need to be recapitalised. The final figure for recapitalisation could be far higher than even the IMF’s estimates if the economy plunges back to recession.

The downturn began this summer, and appears to have gained momentum. Bank lending to the private sector has fallen for two months. Broad money supply is well below the reference rate. A widely followed purchasing managers’ survey points towards a decline in manufacturing activity in August. For all we know, the eurozone may already be in a recession.