EURO will End.

Some late night words of caution from one of the UK's best journalists. In a report obtained by Ambrose Evans-Pritchard, French financial firm AXA is quoted as essentially saying that the chance of the Eurozone's survival is nil. Why a European bank would issue it own suicide note is unclear, although the firm's logic is sound: "The markets are very nervous because they can see that there is a fatal flaw in the system and no clear way out. We are in a very major crisis that has even broader implications than the credit crisis two years ago. The politicians have not yet twigged to this." Ms Zemek said the rescue had bought a "maximum" of 18 months respite before deeper structural damage hits home, with a "probable" default by Greece setting off a chain reaction across Southern Europe. "It would be the end of the euro as we know it. The long-term implications are at best a split in the eurozone, at worst the destruction of the euro. It is not going to end happily however you slice it."




And some more doom and gloom:



Axa said there was "no chance" that the EU's €750bn "shock and awe" shield will succeed since it treats Club Med's debt trap as a short-term liquidity crisis.



In the case of Greece the joint IMF-EU policy will increase Greek public debt from 120pc to 150pc of GDP by 2014, arguably making matters worse.



A number of ex-IMF officials have said the policy is doomed to failure since there is no devaluation or debt relief to offset the ferocious fiscal squeeze, and may endanger the credibility of the Fund itself. The IMF had floated the idea of a debt restructuring but this was blocked by the Brussels.



Contagion from a Greek default would be harder to control than fallout from the Lehman collapse. "This has huge implications for banks. These bonds didn't just disappear; they went somewhere, allegedly into French money markets and insurance companies, or on to French balance sheets," she said.



The ECB has lent Greek banks €85bn, mostly in exchange for collateral in the form of Greek government bonds.



This has kept Greek lenders alive as they suffer a slow bank run, losing 7pc of their deposit base since last June as wealthy Greeks shift their funds abroad. The ECB support is equal to 20pc of their non-equity funding, according to Lombard Street Research.



All this is occurring as Merkel and Sarkozy's denial that all is good is getting progressively more transparent for the mere propaganda, and total lack of long-term planning that it is. With a near record number of EURUSD short contracts outstanding, traders should be wary of massive short covering episodes, although the fate of the EUR, just like that of the US market at this point, are both guaranteed. We will present tomorrow's ECB deposit facility usage as it becomes available. Following today's all time record of €384 billion, at this point the death of European interbank liquidity is a certainty, and unlike the US, as Bank of America points out (and as we will touch upon tomorrow), there is no simple, and US-comparable "print money" solution. Europe is on now its own.