If there is one thing Europe’s politicians can agree on, it is the need for co-ordinated action in the face of a global crisis. Until then, however, it is every state for itself. On Sunday, Germany and Denmark guaranteed bank deposits, following similar moves by Ireland and Greece. But unlike last week, the institutions directly concerned did not get a lift. The entire European banking sector was off about 12 per cent . That is not just markets tiring of sloppy rule-making on the hoof. Rather, it is a growing realisation that scrambling to protect bank deposits is pointless.

Not only is it a zero-sum game – one bank’s small capital drain is another’s small top-up – it obscures an underlying reality. Amid the chaos of government-mandated mergers (Lloyds/HBOS), state capital infusions (Dexia) and liquidity provisions (Hypo Real Estate), the market was systematically weeding out the banks with the greatest dependence on short-term wholesale funding.