Of course, if they all held their deposits in Europe they could all keep their capitilisation levels higher and would all be winners but it only takes one or two to get twitchy and the race to the exit begins.

On the positive side (for the banks) if all that's left in the European banks is worthless junk, all the primo assets having been transferred to the US, then the EU/ECB/IMF will have no choice but to bail them all out again i.e. replace all that junk with cash or bonds, to once again prevent a catastrophe of biblical proportions, fire raining from the sky, cats and dogs living together and etc, etc, yadda, yadda, yadda…

Is this another example of Mark to Model you spoke of before?

Second question which still wondering about.

Evidence is that large deposits are being transferred from European Banks to the US. Usually to their US subsidiaries. Is there an obvious reason why they would to do that? Surely it makes their home capitalization weaker?
It would seem its a safety net but in what way? Is it that they need to continue interbank lending but dont trust the other European Banks? And actually see America as safer?
Any view on that?

The boy, sorry, Palace tailor, who said the King was NAKED!

I can see this ending well.