Portugal banking crisis sends tremors through Europe

``Capital Economics said the ructions in the bond markets confirm fears that Europe's tentative banking union has failed to stabilise the system. "Policymakers have done little to weaken the 'doom loop' between banks and sovereigns in the eurozone's periphery," it said... Critics say the ECB has waited too long to take radical action, allowing the M3 money supply to stall. Loans to the private sector are contracting at a 2pc rate as banks shrink their balance sheets to meet tougher rules. Eurozone inflation has dropped to 0.5pc, a level that pushes the weakest Club Med economies into incipient deflation and plays havoc with their debt trajectories.''