In recent days world markets have rallied as the scale of ECB funding to Europe’s banks becomes clear. A torrent of euros has gushed into bank vaults all over the Old World: something like $700 billion dollars. The money comes at an attractively low interest rate: one percent. (There are days Via Meadia wishes we were a large and troubled bank so that authorities around the world would stuff money into us like French farmers feeding a goose to make fois gras.)As Floyd Norris correctly notes in a very smart piece in this morning’s New York Times, that is what central banks do. The ECB is providing essential and essentially unlimited liquidity in a moment of crisis. By bailing out the European banking system, the bank is indirectly bailing out the troubled Club Med governments. Banks who are paying one percent interest for a loan lasting three years can lock in a nice profit by buying Spanish or Italian government debt at three or four times that interest rate. (Attention all central bankers: Via Meadia is willing to provide up to one trillion dollars to troubled European governments if someone will just give us the trillion to start with. Wire the money to the stately Mead mansion and watch those Italian interest rates come down.)The result of all this has been to ease the short term crisis. It is now very unlikely that any European country except for Greece will be melting down over a long weekend. Barring unexpected new plot twists, we can all finish our Christmas shopping without worrying whether Europe will be around for the New Year.There are lots of questions about what comes next, but one thing looks clear: the Germans backed down. They were using the threat of a European meltdown to force the Club Med countries to undergo painful reforms now and sign solemn treaties swearing that they would never, ever do anything fiscally bad. The treaties are unwritten and the reforms are still very partial, but the Germans have let the ECB turn the money spigots back on.The Merkel government isn’t talking much about this, but it looks very much as if the Germans have bailed out the south with one of the greatest monetary expansions in history — while swearing that they would never do any such thing. Via Meadia advice: follow the German discussion over the mass bailout carefully over the next week or two. Have those industriously Teutonic ants decided to feed those lazy Latin grasshoppers once again? Do Frau Merkel’s colleagues in the Bundestag understand what just happened, and if not, what will they say when the penny finally drops?