While everything was done to reassure the markets that all was well and that Greece would not default and be followed by Spain, Portugal and others – they simply didn’t buy it.

The refusal to engage in trading almost led to a financial crisis of epic proportions. Greece’s credit rating was downgraded to junk status and Portugal and Spain’s ratings to a heavy beating too. In the meantime, Greek, Spanish and Portuguese bonds looked so risky, they were deemed as junk and no one wanted to have anything to do with them.

Then came the IMF and EU bailout programmes. At first, it was believed that simply having money on the table – a loaded gun as it was at that time called – would be enough to allay market fears and stimulate trading. It failed. As a result, wheeling and dealing within the EU continued in an effort to activate the packages. That also failed. The markets remained sceptical and Greece, for one was within days of defaulting. It could still not sell its bonds which were crucial in providing liquid cash which would go directly into payments for a soon to mature loan.

In came the European Central Bank with the biggest U-turn in European financial history. The ECB prides itself on its detachment from European politics and always has a hands-off approach in dealing with European economies. The decision to involve the ECB did seem to reassure the markets and as trading resumed, the price of oil also increased – a sure signal that the economy was indeed picking up – although this was mostly in part due to the increased demand from China.

But, with the economy stuttering and people mentioning the double-dip recession, which this newspaper had warned about many months ago – before it even became a buzzword which was coined by the government, economists and other commentators, the EU finally came up with a solution to market reticence in conducting stress tests on banks.

While the US has said that these were a watered down version of the ones which were carried out across the Atlantic, the results have spurred the markets into action, finally shaking off the sense of apprehension which is so fundamental to trading. This is the so-called market confidence. A couple of banks did fail the tests, but by and large, most did pass including Malta’s own Bank of Valletta.

The tests were carried out a week ago, and now, trade is booming with investors rushing in to fund Europe’s banks’ activities. When money is put into a bank, it does not just sit there in a fortified vault, as some people believe. The funds are re-invested in other activities and this is how the wheel goes round. If people put their savings into the bank and no markets are prepared to fund the investment which then comes out of it, then the wheel stops and we are left in the doldrums, a situation which we have been in for the past few weeks.

Recovery has been slow and sluggish, coming in fits and starts. But with the banks getting a much needed vote of confidence, perhaps trading can now resume in earnest. But – and it’s a big But – we should never go back to the ways of trading pre-2009. The bubble burst and we have to learn from it. Failure to do so would not only be catastrophic, but also insane stupidity driven by greed – the fulcrum of Capitalism in its definitive sense.