Athens and Rome expose Europe's greatest faultlines

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The struggle to repair the banking system is a good example of just how big the task is. Last week, the Italian government and the European Commission agreed a convoluted scheme to relieve the Italian banking system of some of these toxic assets. It uses all the dirty tricks of modern finance, including the infamous credit default swap, a financial product that mimics insurance against default on a bond, which was particularly popular during the pre-2007 credit bubble. These instruments allow investors to hedge against default risk. But more often than not, their true purpose is to conceal information, to fool investors, or to circumvent regulatory restrictions.

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The European Commission previously blocked a proposal to create a classic "bad bank", a state-owned company that would have bought the toxic debt directly from the commercial banks -- thus giving them immediate relief. Doing so would have constituted illegal state aid under European law. The goal of the CDS scheme is more modest. It will bring no direct relief, but will help create an efficient market to sell some of this toxic debt over time. We should therefore expect the Italian banking system, and the wider economy, to continue to struggle.

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There are signs that Italy's patience with the EU and Germany, in particular, is wearing thin . Matteo Renzi, prime minister, has been openly attacking the policies of the EU on energy, on Russia, on the fiscal deficits, as well as German dominance of the entire apparatus.

It is not the euro crisis alone that has brought Italy to the brink of questioning its position in the eurozone. It is a combination of many crises and is likely to gain more momentum from the Brexit debate.