Can the eurozone afford its banks?
Jim O'Neill, probably the most influential thinker at Goldman Sachs (as current head of its asset management division and erstwhile chief economist), has this morning written that "European Monetary Union (EMU) will probably survive, but it is likely to remain very messy".
Which is hardly a ringing endorsement by the world's most powerful investment bank of the most ambitious economic and financial project in Europe of our age.
And, let us not forget, Goldman Sachs is not famous for issuing public statements that rile the world's most powerful governments - which tend to be its customers.
For O'Neill, the issue is about the governance of the eurozone, not about the magnitude of the debts of Europe's financially stretched economies. He points out that the sovereign indebtedness of Greece, Ireland and Portugal is huge relative to the size of their respective economies but almost de minimis in relation to the size of the eurozone as a whole.
Even Spanish debt represents "only" 5.3% of eurozone GDP, he points out.
So if Germany, France and the Netherlands were to properly underwrite the debt of their over-stretched neighbours, Europe would (in theory) have little more difficulty borrowing than the US - whose overall ratio of debt to GDP, at 80%, is more-or-less the same as the eurozone's would be, on a pro forma basis.
The verdict of the markets this morning, following last night's agreement on the structure of a bail-out for Ireland and on a new framework for eurozone financial rescues, is that Germany, France and the Netherlands are a long way from being prepared to properly guarantee the indebtedness of Greece, Ireland, Portugal, Spain and Italy.
The prices of Irish, Portguese, Spanish, Italian and Greek government bonds have hardly moved this morning. The implied interest rate that they would have to pay to borrow for 10 years remains way above normal levels, and a mile above what Germany pays: it's 9.12% for Ireland, just under 7% for Portugal, 5.2% for Spain, 4.45% for Italy, and 11.9% for Greece.
What investors have registered is that, far from saying they'll honour the debts of the so-called peripheral countries, Germany, France and the Netherlands last night sent out an unambiguous message that they want the risks of lending to weaker countries to be born in part by the lenders.
European finance ministers announced new arrangements for rescuing eurozone members to replace the €440bn European Financial Stability Facility from 2013. And these would include the insertion of "collective action clauses" into bonds issued by eurozone countries from June 2013 onwards.
These collective action clauses would make it easier for debtors to force losses on creditors - by, for example, lengthening the term of the debt, altering the interest rate or writing off some of what is owed - so long as a "super-majority" of debtors agreed.
European finance ministers have in effect announced that the risks of lending to financially stretched eurozone countries would increase in two and a half year's time - which is no time at all for many investors.
In practice this means that the eurozone has set itself a deadline of two and a half years to persuade investors that its finances are in order. If it fails to do so, a whole host of weaker eurozone states could find they are confronted with punitive borrowing terms or even a strike by lenders.
If this isn't causing a degree of anxiety for the governments of Portugal, Spain and Italy, then it probably should be. Because, according to figures from Bloomberg and Moodys, they collectively have to refinance more than €165bn of existing debts in 2013 - which takes no account of what they'll need to borrow to finance whatever gap there is between their spending and tax revenues in that year.
What also needs to be pointed out is that O'Neill's relatively sanguine analysis of the challenge for the eurozone takes no account of the financing needs of the eurozone's banks - which can be seen as contingent liability of the public sector.
In the case of Ireland, the banks are now a real liability of the state - and the better news for the Irish government this morning is that the share prices of Bank of Ireland and Allied Irish Bank have risen, following the provision of €35bn for recapitalising Ireland's financial system.
That said, Allied Irish is on its way to being more-or-less fully nationalised, and Bank of Ireland will struggle to avoid becoming majority owned by the state.
What some investors will find disturbing however is that this public-sector rescue of Ireland's banks is predicated on the idea that the banks' creditors will be reassured by a lifting in their capital resources from 8% of assets to 12%.
The fact is that a 12% "core tier 1 capital" ratio - while it may be a multiple of the protection that was in place for banks three years ago - will be seen as still too low by some investors and many international regulators.
Given the size and importance of Bank of Ireland and Allied Irish in relation to the Irish economy, a much higher capital ratio - or greater protection against future losses - could be seen as appropriate (as I pointed out in an earlier post).
Here is what may spook investors in eurozone banks in general - that the IMF and EU may have shied away from putting pressure on Ireland to increase the capital resources of its banks further for fear that to do so would shine a light on what may be seen as a relative shortage of capital in the eurozone's banks in general.
For Europe's very biggest banks, the ratio of their assets to their equity capital is 50% greater than for the UK's banks and 100% in excess of the so-called leverage ratio of big US banks, according to Bank of England calculations. Or to put it another way, Europe's giant banks appear to be taking far bigger financial risks than US and UK banks in relation to the reserves they retain as protection against potential losses.
So here's the big question. O'Neill may well be right that a reformed, integrated eurozone could cope with the aggregated sovereign debts of its members. But it is altogether another question whether even Germany could afford to underwrite the liabilities of the eurozone's monster banks, if creditors started to seriously question whether those banks have sufficient capital.