Europe's Second Tier

The ECB's cheap money deluge is relieving the crisis for some countries who are able to borrow at lower rates, like Italy and Spain, but the policy of exchanging 1% loans for bad collateral--similar to what the Fed did in the US--is in danger of creating a permanent debtor class of countries like Greece who will never be able to pay off its euro denominated debt bomb and will be eternally begging for mo' money from rich countries of the EU like Germany and Sweden. The situation in Greece is getting worse, not better, as the entire EU is headed for another recession, reducing government revenues and putting more and more Greeks into poverty, further reducing revenues. There are simply not enough antiques to sell to make the loan payments. European banks are getting plenty of liquidity from the ECB emergency lending operations, but the banks are only parking the money with the ECB to facilitate their own de-leveraging and meet the new reserve requirements--also similar to what happened with the TARP funds in the US. Greece's only hope of preventing future financial feudalism is to follow Iceland into repudiation, exit the zone, and pay back debts in drachmas. Of course this will drive the big banks crazy with losses, and there may be blood, but Greece is confronting its survival. This chart shows what the Baltic Index, a widely followed leading index of bulk shipping rates, shows about the near economic future for Europe:

The chart below shows the 'double dip' recession the UK is sliding into compared to its previous recession cycles while its sovereign debt total is on a parabola off the chart:

The red line is the current UK recession. It is the worst on record which does not bode well for the rest of Europe.