The markets are evidently not reassured. But why should they be?

It’s hard to escape the sense that European policy makers are just completely out of their depth. They know how to deal with liquidity problems, but they cannot come to grips with the reality that this requires more than buying a bit more time. It’s as if we’re having the following dialogue:

“Ireland really can’t afford to pay these debts.”

“Here’s a credit line!”

“No, really, we just can’t afford to pay.”

“Here’s a credit line!”

It really is like watching a car wreck.