Why is Libor and Euribor going in different directions?

[Beet]

Since these are both measures of overnight interbank lending rates I assume that in the long run these two indicators trend in the same direction. Yet the Libor has been trending down while the Euribor has continued to trend up.

Based on the above assumption and following fact, one can deduce that either the Euribor trend will break, or the Libor trend will break. If you can correctly guess which one you might be able to make money, although I don't know how to trade these rates.

http://www.bloomberg.com/markets/rates-bonds/key-rates/

http://www.bloomberg.com/apps/quote?ticker=EUR003M:IND

Either way, Euribor suggests the European bank situation continues to deteriorate. If I was the ECB I would be concerned about this.

[cannonia]

Wouldn't that be consistent with a flight to safety?  Investors are much more concerned with continental European banks, right?

[Beet]

Wouldn't that be consistent with a flight to safety?  Investors are much more concerned with continental European banks, right?

But during April and May both the Libor and Euribor surged. The thinking then (which I tend to share) is that what's bad for European banks is bad for Anglo banks, and vice versa. Of course, it would be nice for Anglo countries if they could build a firewall around Europe, just as it would be nice for Europe if it could build a firewall around Greece and the PIIGS.