It is quite alarming, seeing the Eurozone turning to political solutions that in reality constitute a deviation from standard democratic procedures.

At the same time, the rest of the world, as it has expressed through the so-called markets, seems to be becoming more sceptical about Europe's ability to effectively face to its sovereign debt problem.

In short, the replacements of the governments in Greece and Italy by unelected technocrats, together with the fact that Berlin and Paris do not seem able to overcome their timidity vis-à-vis the real causes of the problem, which is none other than the politically inflicted inability of the Central European Bank to effectively cope with the crisis.

All this paints an alarming political tableau and questions the ability of the Eurozone to solve the problem. Unfortunately, markets have come to the conclusion that these threats are becoming more severe every day.

An infallible indicator of this is the 7.5% interest rate that world investors are now demanding, in order to continue financing Italy and 3.6% in the case of France. These interest rates are more than what Greece will be charged for its new €130 billion package, which means that France and of course Italy will finance Athens with loans carrying 3.5% interest rate, at very high cost to their taxpayers.

This last problem will add to the instability of the political turmoil that prevails all over the Eurozone, and increase the danger of voters turning to extreme parties, as has happened in Finland and Holland. Even in debt-ridden Greece, the surprisingly high acceptance of Papademos by the public (to the tune of 73%, an all-time high) creates the danger of even greater disillusionment in the coming months, which may drive centre-right voters to extreme-right parties, which are at present riding high on anti-immigration and anti-European policies.

The same is true for Italy – the initial wide acceptance of Mario Monti’s government will turn into equally widespread anger, when the citizens come to understand that their new prime minister stands for severe austerity measures and deep cuts in public spending.

In both cases, Rome and Athens may turn into more explosive political situations, when austerity will be felt by everybody and people realise that technocrats have even worse solutions than politicians.

The US had exactly the same financial problems after the credit meltdown that followed the real-estate crisis. Europe, however, does not possess the two American policy tools that helped Washington overcome its own crisis. For one thing, the American central banks, the Fed, did not hesitate to help the government and the banking sector by supplying them both with unlimited freshly printed liquidity, a critical tool that the ECB is not allowed to use.

The next important advantage that the US had in comparison with Europe was that it was one state and one government, while in the Eurozone there are 17 and, while the ECB drawback may in the end be overcome if things turn more sour, the “one government” advantage is to remain only American, unless the entire Eurozone is being governed by technocrats appointed by the Berlin Paris axis, if indeed the Franco-German political bond survives the crisis.

The markets and political arenas of the Eurozone have reached a point at which the incorrect steps will be very difficult to rectify – it will take a truly central banking institution in Frankfurt and a real Eurozone financial ministry in Brussels to truly overcome this crisis.