As Gina Rinehart goes cold on her Fairfax adventure and petulantly threatens to sell her shares, here’s a great new idea for her desire to be a white knight: for a couple of billion euros, perhaps four, she can help out the eurozone and buy her own country, Cyprus.

Cyprus yesterday became the fifth eurozone country to go broke and ask to be bailed out. The request came hours after Fitch Ratings cut the country’s sovereign debt rating to “junk”. Cyprus only joined the zone in 2008, so it’s a record flop. The country, and especially its banks, have been brought undone by Greece’s problems and the collapse in value of Greek sovereign bonds.

Rinehart revealed she was in the market for a new hopeless cause in a reply to questions from ABC program Four Corners. She might have made a statement publicly, or to the ASX, Fairfax being a public company and so on, but then she’s always played according to her own interpretation of the rules, and sued to make sure she’s right.

Cyprus could definitely be an option. For up to €4 billion, she could take control of Cyprus’ banks and financial system. Sure, there’d be some downsides: Cypriots are divided between allegiance to Greece and Turkey, and Russia is a major creditor, having lent the country more than €1 billion last year because many of its wealthier citizens used Cyprus’ banks to direct investment into the West. Having rich Russians, all of whom have of course made their money completely legitimately, on your tail requesting their money back would challenge even a person with Rinehart’s formidable interpersonal skills. She might even need a proper security assessment.

But like the woes of Fairfax and News Ltd in Australia, Cyprus’ collapse has been coming for a long while — in fact since Greece got into a trouble in late 2009, only a year after Cyprus joined the eurozone. Like the governments of Greece, Ireland, Portugal and Spain, Cyprus delayed its bailout plea to the very end. Thankfully, the divided island doesn’t have the capacity to sink the rest of the eurozone, or for that matter anyone.

But it does underline the increasing need for a once and for all agreement on steadying the eurozone. That was supposed to occur at this week’s two-day leaders’ summit (yes, another one, more summits than the Himalayas, etc) of the EU. But it is now highly unlikely. In fact, hopes for a deal at the summit continue to recede, meaning plans for reforms to banking regulation will be difficult to achieve, if not impossible. So the chances of using the two bailout funds and their €500 billion or so  of firepower to buy sovereign debt of countries such as Spain and Italy also appears more remote. Not helping was Germany’s leader Angela Merkel, who again made clear her opposition to debt sharing and shared liability for debts.

Throwing further doubt on the chances of a major, settling statement from the summit was the leaking of plans to the Financial Times for closer fiscal co-operation for the eurozone. “The European Union would gain far-reaching powers to rewrite national budgets for eurozone countries that breach debt and deficit rules under proposals likely to be discussed at a summit this week, according to a draft report seen by the Financial Times. The proposals are part of an ambitious plan to turn the eurozone into a closer fiscal union, giving Brussels more powers to serve like a finance ministry for all 17 members of the currency union. They are contained in a report to be presented at the summit, which will also outline plans for a banking union and political union.”

This won’t go down well in France (which talks a lot about “mutuality” but recoils at the political changes needed), Italy (likewise), Spain (ditto, especially among the spendthrift provinces) and of course Germany, which insists on changes such as these proposed, but which also has strong domestic opposition to any German underwriting of the rest of the eurozone and to attempts to regulate German banking.

Germany has demanded tough controls over national budgets as a prerequisite for mutualising sovereign debt within the eurozone, and the proposals appear to be an attempt to get German support for eurozone bonds (which will be needed to finance any move by the two bailout funds to buy the debts of troubled countries such as Spain and Italy). The banking proposals include urging eurozone leaders to give bailout funds the power to directly inject capital into struggling banks.But the Financial Times says the draft proposes creating a common EU bank supervisor with powers to reach into far more banks than originally thought because it includes the idea of intervening in smaller, domestic banks, such as Germany’s troubled and financially crippled state and local savings banks. Germany has resisted that strongly, even though many have been bailed out. It’s why Germany wants to restrict supervision to cross-border banks. The domestic political fight would be too much.

And, last weekend Merkel agreed to join with state governments to support the issue of so-called ‘”Germany bonds”, which is similar in concept to the proposed eurozone bonds in that the central government in Germany effectively guarantees the debts in the various states. With their stricken state and local savings banks, some German states have high debt and deficit levels, much like Greece, Cyprus, etc. This new bond effectively bails out those profligate states. Merkel agreed to the idea to win support from opposition parties to her cherished eurozone stability pact.

Financial markets of all sorts took a hit because of the Cyprus news, Spain’s bailout request and the looming downgrade by Moody’s, which hits euro giants Santander and BBVA as well as 26 smaller banks in Spain. The Moody’s move followed its downgrading of Spain’s sovereign debt on June 13 to near junk status. Oil prices in particular seem to be signalling a further slide in global economic activity, with US prices less than $US80 a barrel for a third day. If that happens, the financial pressures on the EU and the eurozone, plus the US (with its big spending and cuts and tax increases due to happen in early 2013, still unresolved) can only rise, despite the benefit of falling petrol prices and lower inflation generally.

Moody’s cuts this morning followed its move late last week to cut the ratings of 15 major banks because they owned investment banking operations which increased the banks’ exposure to problems such as the ongoing eurozone crisis. Spain’s request unhelpfully failed to include an amount for the requested aid, adding to the impression that Spain refuses to face up to the the extent of its problems and believes it can get a deal on the cheap. It’s hoped that request will be sorted out by the July 9 meeting of eurozone finance ministers and not the leaders’ summit starting on Thursday.

And more bad news, France’s finance minister said overnight the country needs more cuts to reduce its budget deficit to 4.5% of GDP. Finance minister Pierre Moscovici was reported by newsagencies as saying cuts of €10 billion are needed to reduce the red ink. What are the chances of that happening with the anti-austerity policies of Socialist president Francois Hollande now firmly in place? If France continues to miss its deficit targets, what are the chances that Spain, the Netherlands, Greece, Ireland, Italy and Portugal will keep to their targets, despite all admitting they will have to make more cuts to reach these levels?

And given tax revenues in Greece continue to slump, how long can the Germans in particular, plus the EU and IMF, insist on more cuts in Greece to reach its targets? According to London newspaper reports, overall revenues in Greece fell €1 billion in the first five months to 2012 from the same period of 2011, thanks to a sharp fall in company and property tax collections.

Meanwhile, more summits … Last Friday’s four-way talkfest in Rome between the heads of Germany, Italy, Spain and France failed to agree on anything, despite claims of a €130 billion spending package (which was only €10 billion more than the older €120 billion package agreed in May). So after that experience, you have to ask why Merkel and Hollande will meet tonight, our time, a day ahead of the leaders’ summit. Do they really like each other’s company that much?