The IMF came out of Los Cabos with a staggering safety fund of $456 billion, including a $75 billion top-up by the BRICs countries. The day after, short-term Spanish government bonds had to offer 5% interest to get buyers. That was the highest ever in the Eurozone and evidence of continuing market fears.
Why one act is having no impact on the latter is a parable about how the world sees the Eurozone crisis.
The fear was never about Greece. The world's 34th largest economy was never big enough. The real Godzilla were Spain and Italy, the 3rd and 4th largest economies of the Eurozone. The IMF's total lending strength, now over $800 billion, and the Eurozone's own emergency funds (800 billion euros), would be too small to cover a bilateral blowout of these countries.
Which is why every leader arriving in Mexico the past few days has kept stressing that ultimately the Eurozone crisis has to have a Eurozone solution. Indian PM Manmohan Singh proposed that if Germany, the only Eurozone country with the surplus and credibility to bail out the continent, did not want to give money to Greeks or Italians, perhaps it could just spend it on itself. He understood increased demand in Germany would help lift Europe as a whole. He also endorsed a European banking union, which would put its troubled banking sector under a single regulator.
No one is certain how badly battered the accounts of Spain's banks are. Which is why the 100-billion-euro bailout of the banks got the market more worried.
Europe remains in limbo. A pro-austerity government seems likely in Greece, but it's not one with a mandate. Spanish banks are the new black hole of European finance. With all this piling up, the G20 pledges were noticed only in passing.