And then over on ZeroHedge this story:

In what is probably the riskiest escalation of the second credit crisis to date, IFR has released information that was until now speculated, but not confirmed, namely that European banks not only continue to make a mockery out of LiEbor by posting whatever rates they deem appropriate (for the simple reason they don’t use interbank funding), while in the meantime going directly to US banks, using shadow, and hence completely unregulated conduits, in the form of private repo arrangements with "at least three of the five biggest US banks." Now where this is interesting is that as Zero Hedge disclosed three months ago, the bulk of the cash generated for the pendancy of QE2 went not to US banks, but to US-based branches of foreign banks. Which probably means that there is a roadblock to repatriating the US held cash (even in exchange for perfectly legitimate receivable debits). Because one would think that this is where the first source of cash for troubled banks would come from. Assuming it hasn’t been repatriated already, or is not stuck in some IOER-GC carry trade that generates virtually no return (and when the Fed lowers IOER even more, absolutely no return). Alas this means that the 3M USD Libor which we update every day is substantially under-representing the true funding squeeze in Europe. Even worse, it means that US banks have lent us tens, if not hundreds of billions of cash, in exchange for collateral that could be virtually anything, and which collateral bypasses traditional Fed supervision. As a result, US banks can and will go hog wild in lending repo dollars (at big collateral haircuts but still) to European banks until everyone suddenly runs out of money, and the Fed realizes it has to not only fill traditional liquidity holes, but a massive shadow banking shortfall, precisely the stuff that none other than the Fed has been warning about over and over. Just like in 2008 when the big hit to the system came not from traditional sources of risk but perfectly innocuous and thus ignored money markets, so the same will happen this time, as the biggest crunch will come completely out of left field. It always does.

From IFRE:

US banks have become the unlikely saviours of their ailing European counterparts, signing private agreements to lend them billions of dollars in recent weeks after an exodus of nervous money market funds left many without ready access to short-term funding.

Agreements worth tens of billions of dollars have been signed in the last month alone, according to bankers directly involved, who added that senior management of firms on both sides of the transactions have been closely involved with hammering out deals.

French lenders are among those using such facilities, say bankers, although deals have also been struck with UK and other European firms. Loans have been made as repo agreements, with banks posting assets such as corporate loans and mortgage portfolios as collateral.

Is it not more that Europe is dragging the rest of the world down. The Euro is a dead duck, everyone knows that and pretending that it can be resolved at this stage is only allowing more potential to build up. Yes splitting it, will be painful but at this stage there is no good options.

Does the EU want to survive no matter what the cost or damage to the global economy and European stability or does it want to step back from the madness that the Euro and last 3 treaties entailed.

What the next step will probably be is forcing the weaker countries out. People will say that they can’t do that yadayadayada, but they haven’t exactly been taking notice of treaties so far have they. Between EU survival or get rid of the Piigs, it will be an easy choice. The problem is that the French, German and Austrian banks are in a shocking state, can they survive as well.

I was never in favour of the Euro or the last few treaties. I was happy with a community of countries working closely together, not the one superstate approach but I never felt that it would all fall apart so quickly and at such immeasurable risk as it is now. There really is not good options any more, just less bad ones. Time to face reality!

Reality is knocking and its pissed off with Brussels.

think its time Europe called it a day. there doesn’t seem to be any recovery.everytime they give us good news two weeks later its bad news.

It seems that it lasted just a few hours.. Just in …….
http://www.zerohedge.com/news/global-central-bank-intervention-impact-total-retrace