How sinister is the Libor rise?
The interest rate at which banks lend to each other in dollars, the famous BBA three-month dollar Libor rate, has been creeping up day after inexorable day since the end of February.
The cumulative impact has been a doubling of that rate during those 90-odd days, to more than 0.5% yesterday - the highest three-month dollar Libor rate for something like 10 months.
What does it all mean?
As you'll probably recall, when Libor rose relative to central banks' official funding rates in an almost unbroken sequence from the summer of 2007 till the autumn of 2008 - when Lehman collapsed - the causes were sinister.
It was the most visible manifestation of perhaps the worst liquidity crisis the world's big banks had ever experienced.
A whole series of wholesale markets in which banks had raised hundreds of billions of dollars closed down. And there was no great pool of cash elsewhere to make up for this great loss of finance - so the interest rates at which banks lent to each soared.
As 2007 turned into 2008, this liquidity crisis transmogrified into a solvency crisis, as the shortage of finance led to sharp falls in the price of assets, especially property and loans to property, which generated huge losses for banks.
The horrible consequence was that a liquidity crisis became a catastrophic solvency crisis: one enormous investment bank, Lehman, went bust, and a series of other financial institutions would have followed Lehman to the graveyard if taxpayers hadn't resuscitated them with unprecedented injections of new capital.
What's more, central banks have - since the Lehman debacle - created unprecedented amounts of new money, and have lent record sums to banks.
That means it's difficult to argue that banks are suffering from a liquidity crunch on anything like the scale of 2007 and 2008.
And if you want evidence that banks really can't be chronically short of cash, just look at how little the European Central Bank has increased its loans to banks over the past 18 days or so: its net funding for banks has risen just 6% or so, which is hardly proof of banks gasping for liquidity.
What's more the take-up of dollar loans by the ECB under swap arrangements with the US Fed has been paltry, even though the Libor prices indicate that the peak of stress for banks is in the dollar funding market.
All a bit odd. Unless you think that what's going on is the reverse of the trends of 2007-8.
It could be that this time a solvency problem is wagging the liquidity dog, rather than a liquidity shortage giving a good shake to the solvency dog.
Or to put it another way, it may be that what's persuading banks' creditors to demand a higher rate for their loans is the expectation that European banks' will suffer big losses on their holdings of assorted eurozone government bonds and their loans to assorted European property markets.
The rising price of Libor may be based on the belief that a possible default by the Greek government on its debts, or a further downward lurch in the value of Spanish property, could generate unsustainably high losses for a number of big European banks.
Or to put it another way, the Libor rise may be saying that the eurozone's fiscal crisis could be the precursor to the demolition of some substantial, thinly capitalised European banks.
Which would be the most worrying interpretation of the Libor rise.
There is however a more benign explanation.
The thrust of anticipated bank reforms - whether they're the Obama reforms or the increases in capital and liquidity ratios to be demanded of banks by the Basel Committee on Banking Supervision - are likely to have the effect of increasing the costs for banks of lending.
And if the costs for banks of lending were to rise, that would mean that banks themselves would have to pay more for their credit, along with the rest of us (ouch). Hey presto, three-month dollar Libor rises in a semi-permanent way.
As it happens, there is one more explanation of the Libor rise: that disunited regulators, central bankers and government heads are largely united by a single reforming ambition, which is to put in place new legal structures for big banks that would allow them to fail without crippling the economy.
Here's the paradox. If big banks can be allowed to fail, if they could no longer be certain that they'd be bailed out by taxpayers in a crisis, the risks of lending to them rise.
So in sanitising the banks, in turning them from weapons of mass destruction into more conventional businesses that can be permitted to go bust, they become less attractive to creditors, who would obviously demand a higher Libor interest rate.
Update 12:05: Three-month dollar Libor has spiked up again, to 0.54%.
Today's bout of investor and creditor nervousness has been triggered by the IMF's analysis of the structural weakness of the Spanish economy and mounting evidence of the fragility of Spain's banks.
There's never been any mystery about the excessive exposure of Spain's banks to a bloated property market. The mystery has been how its banks avoided crippling losses on this exposure - although that increasingly looks like pain postponed rather than avoided.
Or, at least, that's what today's retreat in share prices across Europe is saying, with bank shares falling especially sharply.
And the cost of insuring Spanish government bonds has risen again. Which implies that bond losses could be the double whammy for Spanish banks.
It's all looking a bit unstable again.