"Apart from spot trading, all swaps and forwards trading (with the European banks) have been stopped," one source who is familiar with the matter told Reuters.
The question is this: How much flow are we talking about here?
This is either a nothing or it's a precursor to a really, really big ...
Which is it? I don't know. But the banks over in Europe this morning, especially BNP, are acting like it's the "Big Bada-Boom" that's inbound - right now.
The lack of transparency and demonstrated willingness to lie - including, in fact, European ministers openly stating that when things are bad you have to lie - is a huge problem.
There are many who claim that we can "ward off" crisis with the ECB and such stepping in to "save" people "as required." The fact of the matter is that we're right back where we were in the 2007/08 mess when it became clear that lending people money who you know can't pay you back is not a sustainable business model.
How long will we continue to play this game where we have 2% moves in the market in the space of hours or minutes and "contagion" continues to percolate while investor confidence is decimated? Eventually this sort of volatility and the plethora of lies results in a bid collapse into one of those volatility spikes.
This is not how you get a market decline -- it's what generates crashes.
There is only one solution: The truth. It involves acceptance of pain, which nobody is willing to do in the present tense, yet there is no way around it. The longer we play "extend and pretend", the more we lie and the longer the games go on the worse the situation becomes both here and abroad.
We in fact learned nothing from 2008 - we simply gave a bunch of whining children on Wall Street that had just smashed their fingers with a hammer a candy bar, and we didn't even have the dollar to buy the candy with.