Are the markets all powerful? Up until a few weeks ago, we were told that they were. Back then it looked as if the debt crisis was about to sweep away, not just Greece which had been given up for lost, but also Spain and Italy, while Europe’s leaders appeared to be incapable of stopping an infernal spiral that continued to feed on itself.

But then something happened. The change was triggered around the time of the European summit at the end of June when the 27 EU states finally provided a clear demonstration of their will to make progress on economic integration and a banking union. In so doing, they put an end to months of procrastination, which had fed the uncertainty that spooks investors and provides a field day for speculators.

The summit has been followed by a period of intense diplomatic activity — notably on the part of Italian Prime Minister Mario Monti and his Spanish counterpart Mariano Rajoy, who have joined forces to fight monstrous yield spreads, while Greek Prime Minister Antonis Samaras has set about pleading for a little leeway for his country. Then, in what was clearly a political move, Mario Draghi announced that the European Central Bank was “ready to do whatever it takes to save the euro.”

Having enjoyed a relatively sheltered existence since his election, François Hollande will now have to gets his hands dirty with the European crisis. He is meeting Angela Merkel on August 22, Samaras on August 24, Rajoy on August 30 and Monti on September 4. As for the German Chancellor, she will meet Monti on August 29 and with Rajoy on September 6.

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All of this activity will culminate with the European summit in Brussels on October 18-19, when the heads of state and government leaders will define their approach to the financial questions posed by Spain, Italy, and especially Greece.

In the meantime, the troika is expected to submit its report on the progress of reforms in Greece towards the end of September and it will be up to Brussels to decide on a possible review of the austerity conditions imposed on Athens.

Between now and then, on September 12 to be precise, the German constitutional court will announce its ruling on the validity of parliamentary ratification of the European Stability Mechanism, which will be crucial to the market credibility of the drive to provide relief for countries in difficulty.

During all of this time, the spectre of a Grexit will continue to haunt European politics, and while they continue to make reassuring statements, bankers and politicians will continue to make plans for the worst possible outcome. So are the recent positive noises no more than bluff? We will soon find out.

The time has come to put an end to the game of hot and cold that continues to jar the nerves of Europe’s citizens.

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