The infamous Hypertiger would say, with a factional reserve compounding interest banking system the only way to continue, is to inflate more than the previous inflation. Brentwood II was one such continuation play.

Without imploding first then coming up with the same plan to start all over again I don’t see any way to reinflate above the previous inflation. You need another bubble (even larger than the RE bubble) to throw money at to create demand for central banks to satisfy.

If they can’t get consumers to spend, the central banks are toast. Doesn’t mean they won’t try.

(China watching from the sidelines just wants their money, paid in full)

There’s a joke about going to the mattresses somewhere in all this.

The black hole is dark and deep, and has been quite capable of swallowing anything pushed in its direction, so far over the last 18 months. (Nearly $4 trillion, if you include legislative stuff, and $2,719 trillion if you just take the Fed’s own initiatives). (And the biggest estimate of the real estate related problem of the banks is $1.4 trillion, isn’t it?)

So Merkel should be applauded for backbone and smarts. Bush won’t talk to her on the phone anymore. Merkel is defending tax payers everywhere. She should be supported.

Could the US budget deficit hit $1.5 trillion plus in FY 2009 or even $2 trillion plus? (438+880+300+?). The expected reduction in the trade deficit should help a bit, shouldn’t it?

The black hole that needs to be plugged up may not just be the banks anymore, but the insatiable appetite of the Treasury and the Federal Reserve for new sources of funding for ever new initiatives to support the system. That’s probably what they want from Europe, new money, much better than recycled government debt from China.

I will be AMAZED if the Eight Horsemen manage to issue a substantive, signed-on plan by 0800, Monday 13 Oct 08. We need it, but they aren’t up to it. More likely, someone like the Strauss-Kahn of the IMF will be trotted out to read a proposed document which the Eight then have to return to sell to their domestic constituencies. By which time, the ex-ibanks will have collapsed the financial economy into themselves.

This is how one gets communism rather than socialism, folks: Gross public displays of greed, incompetence, and sociopathy by the ‘dealership’ leads the proles to defend themselves openly, too. If one gets depression from recession due to incompetence (not exactly, but that’s a commonplace formulation), one gets totalitarianism from emergency in the same way. It’s not a given, the conditions have to be shaped for it. The sight of the overclass clutching our children to their pudgy selves as human shields while shooting at each other is a shaping event. All those ancien regime aristocracies who got mobbed to death: It was ugly, but they bought their ticket in the queue on merit. Mmmphh.

With all due respect, the headline of this Telegraph article is “Standard of living will fall, warns Mervyn King.” The body of the article cite statements that support the formulation used in the headline.

And the organization he supervises is called the Bank of England. But I will try to watch my usage in the future.

As central bankers go, Mervyn King is relatively plain speaking, but I don’t believe he has warned that living standards will actually fall. What he has said is that living standards will not rise for a year: http://www.independent.co.uk/news/business/news/living-standards-will-not-rise-for-a-year-warns-king-855490.html

Anyway, let me take this opportunity to thank you for keeping up the flow of information at this relentlessly busy time.