European banks deposited 239 billion euros with the European Central Bank last night at the overnight rate of 3.25 per cent and borrowed just 14 billion at a rate of 4.25.
That’s what we mean by a credit crunch.
Governments who have underwritten bank debts and lending, bought stakes to recapitalise them and generally tried their damndest to rescue the banks from the results of their own folly will be mightily pissed off.
If they won’t lend then the governments might as well do it themselves and cut out the middlemen - the banks.
Sooner or later the dam has got to break otherwise the voters and their elected representatives will start demanding that a few more banking heads roll.
Do the banks really think they can continue just earning interest on our money?