Stephen Foley: Cassandra King takes the stage in Liverpool

Outlook The notes struck by Sir Mervyn King sound gloomier each time the Bank of England Governor rises to speak.

In Liverpool last night, he opined that, four years after the financial crisis, there are still politicians and governments refusing to face up to the realities that the crisis revealed. Surely it is time to recognise that the underlying problem is solvency, not liquidity, he said.

That was a jab at eurozone leaders who believe their problems are not too much debt, but the market's irritating refusal to fund their servicing of it. Sir Mervyn hasn't opined publicly on the different plans for leveraging up the European Financial Stability Fund, but it is fair to say he sees it as a stop-gap measure, rather than the resolution to our ills.

At core, what is needed is a rebalancing of the world economy. Many countries in the West took on too much debt, from their consumers to their banks to their governments, and became to all intents and purposes insolvent. Creditor nations, including Germany and Japan, must rebalance their economies, and invest at home rather than feeding the binge abroad. Yet China now, as Sir Mervyn pointed out, has far larger foreign exchange reserves now than at the start of the crisis.

It is inevitable that the international community will have to face these facts, yet its willingness to do so is only diminishing. No wonder Sir Mervyn is so gloomy.