Yesterday the Fed and 5 other major central banks announced measures to shore up liquidity in the global banking system.

  The problems in Europe lie in plain sight. It is likely that the ECB will eventually print money to monetize European sovereign debt, albeit at the eleventh hour, on the eve of some pan European bank threatening not to open for business one winter’s morning. The debt problems in the US are also pretty

Is the European banking system solvent? How many European banks are insolvent? If one marks to market the value of all the assets of each European bank, how many would remain solvent?

Banks trade on confidence and reputation, not financial strength. Put aside for the moment the complicated and confusing Basel rules and let’s apply some common sense. Put aside definitions of risk weighted assets and Tier 1 or Tier 2 capital. Look at a bank as a business.

The beginnings of a proper recovery are emerging in the US driven by exports and the repatriation of manufacturing.