The fallout from the EU summit last week ago continues as more and more analysts here and in Europe now believe that despite an agreement on the broad outlines of a fiscal union, a meaningful deal that would save the euro and address the continent's debt problems might be impossible.

The latest to see this is the credit rating agency Fitch. Reuters:

The credit rating agency Fitch said on Friday it thought a comprehensive solution to the euro zone's debt crisis was beyond reach, putting six euro zone economies including Italy on watch for potential near-term downgrades.

It reaffirmed France's top-notch triple-A rating but even here said the outlook was now negative, meaning it could be downgraded within two years.

Underscoring the tensions within the bloc over a crisis that has spread relentlessly over the past two years, Italy's prime minister urged European policymakers to beware of dividing the continent with their efforts to fight its debt crisis.

In a swipe at Germany, he warned against a "short-term hunger for rigour" in some countries.

Germany has led resistance to allowing the European Central Bank to ramp up its buying of government bonds on the open market to a big enough scale to douse the crisis, but Fitch added to the pressure for just such a move.

Fitch said that following the EU summit a week ago it had concluded that "a 'comprehensive solution' to the eurozone crisis is technically and politically beyond reach."

"Of particular concern is the absence of a credible financial backstop," it said. "In Fitch's opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States."

As the largest economy, Germany realizes where most of the funding for the central bank will come from if it is allowed to get into the bond business big time. In effect, Germany would be backstopping the backstop - an intolerable situation for the German taxpayer and one that poses extreme danger for Chancellor Merkel and her coalition government.

Unless a way can be found to spread the risk for the central bank, no credible action can be taken. That means that in a few months, the euro zone is likely to be back right where it started - staring catastrophe in the face.