So we are now facing:

- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared;

- a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs);

- a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over;

- a total seizure of the interbank and money markets.

This is indeed a cardiac arrest for the shadow and non-shadow banking system and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down the risk of an economic collapse similar to the Great Depression becomes highly likely.

http://tinyurl.com/43lehu

Hey, I'm just getting used to it.

re: "they employ borrowed money to purchase whatever it is they currently own"

Seems like a perfectly sound financial system, to me.

Official says pension funds are down $2 trillion

WASHINGTON - The top congressional budget analyst says pension plans have lost as much as $2 trillion in the past 15 months.

Peter Orszag told a House panel on Tuesday that the losses are likely to force many workers to hold off on major purchases and delay their retirements.

http://tinyurl.com/4xbj3w

Good thing the Fed is going to lend money directly to corporations, so that they can continue to make junk no one will be able to afford to buy.

For a minute there, I was worried.

In that case, I must nominate Walter Map and myself for having sounded the alarm on The New York Times now-defunct forums, starting back when Dubya stole the White House.

I can Google up any old posts that haven't been lost down the memory hole, but for now it will have to suffice that Walter and I know that we were sounding a clear warning of the impending economic disaster long before any mainstream pundit even knew what was happening (and they still don't quite get it). The frightening thing is, this wasn't rocket science. As with the Saddam-WMD nonsense, all you had to do was read the mountains of available material to see where this was all headed. I'm certainly no economist, but even I know that if you shove a car over a cliff, it WILL crash and burn.

And, as with the Saddam-WMD nonsense, the MSM very effectively drown out any such information in order to promote the militarist-corporatist-monetarist agenda: Rape, pillage and plunder the entire planet, aka "Full-Spectrum Dominance" *(See below).

Now, of course, it's far too late for all of us.

P.S.

Here's an excerpt from a post I made on the Democratic Party forum, prior to the 2006 election, wherein I opined that, due to the irreversible nature of the impending disaster, the Democrats might not wish to be the majority Party, lest they be blamed:

I'm afraid this monumental disaster is best left to play itself out under full Republican control, so that come 2008 there will be zero doubt as to which party is responsible for it.

Couple the Iraq fiasco with the impending economic recession, and you have two very good reasons why this giant mess Bush has created should remain in Republican hands.

Posted by Scorpio69er on November 6, 2006 at 11:30 AM

http://www.democrats.org/a/2006/11/day_before_open.php#comments005828

* The imperial grand strategy is based on the assumption that the United States can gain “full spectrum dominance” through military programs that dwarf those of any potential coalition and that have useful side effects. One is to socialize the costs and risks of the private economy of the future, a traditional contribution of military spending and the basis of much of the “new economy.” Another is to contribute to a fiscal train wreck that will, it is presumed, “create powerful pressures to cut federal spending, and thus, perhaps, enable the administration to accomplish its goal of rolling back the New Deal,” a description of the Reagan program that is now being extended to far more ambitious plans.

-Noam Chomsky, Dominance and Its Dilemmas

http://www.bostonreview.net/BR28.5/chomsky.html