There is something big going on this weekend in Brussels; apparently the EUrocrats have seen the abyss and have promised us the world come monday morning to save the European currency and banks, both of which are now in serious trouble. This is the central bank intervention I spoke about all week long. By doing this, the European Central Bank is crossing the Rubicon; it is finally admitting that there is serious problems in Europe. There is talk of the Fed re-opening the "swap lines" with the ECB, essentially allowing the ECB to print USD as opposed to Euros. Rumors of the size of the bailout is in the €600 billion range, and it had better be; if all they come up with is hot air and a very small bandaid, the markets will immediately crash monday. All of this leads me to believe that Thursday's crash was more than just a typing error at a trade desk. In short, Lehman 2.0 has arrived in Europe.
For more details, I'll defer to Bruce:
For a terrific explination of what's happened in the last two days & why this is happening:http://notayesmanseconomics.wordpress.com/2010/05/09/the-euro-stabilisation-fund/