And so it goes

The news from Cyprus (well, the southern part of it that is in the EU and, indeed, the euro, is that its government has resigned under a great deal of political pressure as it is expected to ask for a bail-out. To be absolutely fair, the reason for the downgrading by Moody, the threatened bail-out and the promised wide-ranging reshuffle of the government were all caused by a massive explosion.

Christofias's centre-left administration has faced unprecedented public fury from the blast, caused when a cargo of confiscated Iranian munitions exploded next to the island's largest power plant, killing 13 people.

Cypriots have taken to the streets in their thousands to demand the resignation of Christofias and his government.

On Wednesday, Moody's downgraded Cyprus to three notches above junk status due to the fiscal fallout from the blast, adding to the strain on the economy from its exposure to Greek debt.

Since the blast, markets have trained their sights on the east Mediterranean nation as a possible fourth recipient of a euro zone emergency rescue after Greece, Ireland and Portugal, and political wrangling now risks derailing much-needed economic reforms.

The island's central banker Athanasios Orphanides has warned that without urgent action, Cyprus could be forced into seeking a bailout.

There have been calls for Christofias, a Communist whose term expires in 2013, to step down, but that appears unlikely. As leader of Cyprus's dominant Greek Cypriot community, he leads reunification talks with estranged Turkish Cypriots to clinch a peace deal to end decades of conflict. The absence of such a deal is harming Turkey's bid to join the EU.

In the circumstances, Turkey may not be all that interested in that bid, though, clearly its government goes through the motions.