Following on from stories of the Irish Central Bank printing its own Euros to lend to the crippled banks, ZeroHedge has the following bizarre twist, rightly described as the ultimate ponzi scheme :

When about six months ago we noted that the European ponzi is in full force, courtesy of banks using any toxic assets as collateral to the ECB, little did we know just to what heights this scheme would reach.

Today we get our answer. The Irish Times writes that Irish Banks are issuing billions in bonds to themselves “under the Government guarantee to borrow cheaply from the European Central Bank and to avoid drawing more heavily on emergency lending from the Irish Central Bank. Four banks issued bonds worth €17 billion to themselves last month under the Government’s extended guarantee, the Eligible Liabilities Guarantee, to use as collateral to borrow from the ECB.

“What you have here is micro-quantitative easing, or money printing,” said Cathal O’Leary, head of fixed-income sales at NCB Stockbrokers. “The banks are issuing unsecured loans to themselves.”

And since this is happening in Ireland, it is most certainly happening everywhere in Europe. And yes – this is the pinnacle of a pyramid scheme – this is about a thousand times worse than what US banks did when they purchased CDO tranches from each other, as the risk in the Irish case is ultimately borne by the European taxpayer.

But such is life when the entire financial system continues to be massively insolvent, and only openly Ponzi schemes of this nature allow the system to continue operating on a day to day basis.

As the article says, I would not be at all surprised to find that Irelands banks are not alone in doing this and am left wondering how much higher this pile of debt can be built until it falls over and crushes everyone who isn’t on the inside of the game?