You've Been Warned. So says the European Central Bank about an impending collision between the never ending European debt crisis and Europe's increasingly slowing economies.

Risks to euro area financial stability increased considerably in the second half of 2011, as the sovereign risk crisis and its interplay with the banking sector worsened in an environment of weakening macroeconomic growth prospects. Indeed, several key risks identified in the June 2011 Financial Stability Review (FSR) materialised after its finalisation. Most notably, contagion effects in larger euro area sovereigns gathered strength amid rising headwinds from the interplay between the vulnerability of public finances and the financial sector. Euro area bank funding pressures, while contained by timely central bank action, increased markedly in specific market segments, particularly for unsecured term funding and US dollar funding.

Here's the money shot statement from the ECB. Things are worse than right after Lehman Brother's, the OMG Economic Armageddon global meltdown almost, collapse:

The transmission of tensions among sovereigns, across banks and between the two intensified to take on systemic crisis proportions not witnessed since the collapse of Lehman Brothers three years ago.

Here come the dominoes in the form of global economic malaise. Contagion is when one nation's economic disaster spills over and affects the globe. That's the United States folks.

The ECB in part blames the credit ratings agencies who have been on the attack.

While several catalysts were at play in prompting the materialisation of these key risks, a combination of weakening macroeconomic growth prospects and the unprecedented loss of confidence in sovereign signatures were key factors, crystallising in downgrades, both within and outside the euro area, by major credit rating agencies.

Earlier we had S&P almost declare war on the entire Eurozone with downgrades. Fitch is downgrading as we type, as is Moody's.

Fitch Ratings has placed the Council of Europe Development Bank's (CEB) and the European Investment Bank's (EIB) Long-term Issuer Default Ratings (IDR) on Rating Watch Negative (RWN). The agency has also revised the International Finance Facility for Immunisation's (IFFIm) Outlook to Negative from Stable and affirmed the European Investment Fund's (EIF) IDR with a Stable Outlook.

The IMF is also warning of a 1930's style global depression:

The managing director of the International Monetary Fund has warned that the global economy faces the prospect of “economic retraction, rising protectionism, isolation and . . . what happened in the 30s [Depression]”, as European tensions again flared over suggestions in Paris that the UK’s credit rating should be downgraded before France’s.

“There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating,” Christine Lagarde said in a speech at the US state department in Washington. “It is not a crisis that will be resolved by one group of countries taking action. It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action.

Economist Paul Krugman also argued for the "D" word to be used:

It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.

Here are the four ECB identified points causing a global economic pending crisis starting....well, right now.

1. Contagion and negative feedback between the vulnerability of public finances, the financial sector and economic growth
2. Funding strains in the euro area banking sector
3. Weakening macroeconomic activity, credit risks for banks and second-round effects through a reduced credit availability in the economy
4. Imbalances of key global economies and the risk of a sharp global economic slowdown

Such a notice should be signed....

Dear World,

Merry Christmas and Happy New Year!
 A lump of coal for you and all your kin is here within!

Sincerely,

The Global Financial and Banking System