Reek of Desperation Surrounds EU Banks As Regulators Prepare for "Derivatives Clearing Crisis"

It all reeks of desperation. So, too, does the semi-clandestine bailout of Spain's state-owned Banco Mare Nostrum. With the markets showing zero interest in taking the bailed-out entity off the public's hands, the government is trying to usher it into a forced marriage with largely state-owned Bankia. The message, once again, is resoundingly clear: the only way the bank can be maintained as a going concern is through continued and growing public support.

The zombification of Europe's banking system -- the legacy of years of doing "whatever it takes" to save giant insolvent banks -- continues to gather momentum. Things are now so serious that some of the world's most senior policy makers are not only beginning to warn of a new financial crisis, they're beginning to turn on each other in public...