The European Central Bank finally delivers on a rate cut

The euro-zone remains bogged down in a recession, and after a new record for unemployment - 12.1% - and a drop in it's CPI  to a rate of 1.2%, the European Central Bank finally threw in the towel and offered up what I would call a symbolic rate cut of 25 bp to 0.50%.

Whoopee! Sadly, Europe's in a world of hurt, and a 0.25% reduction in its key rate won't solve what ails its economy.

One reason in particular came to light in the ECB's press conference, which traditionally follows its monthly meeting.

ECB President Mario Draghi remarked, and I'll relay his complete statement before commenting, "In the U.S., 80 percent of credit intermediation goes via the capital market. Capital markets rate and price assets in a right or wrong way, but it’s fairly transparent.In the European situation, it's the other way around; 80% of financial intermediation goes through the banking system."

That's a huge problem for Europe, but it highlights one reason the U.S. economy has managed to plow ahead, even if it's at a sub-par pace.

You see, U.S. banks weren't lending during the recession and in the initial stages of it's recovery. In fact, standards are still on the tight side. But access to capital via capital markets provided some lift.

European businesses depend on banks for support, and their banks are under-capitalized and aren't lending. In fact, they'll need to raise hundreds of billions of euros in capital or shed trillions in assets to get capital ratios where they need to be.

That means Europeans will have to navigate a very rocky road in the coming months and years..