Nick Robinson last night..

.. was on BBC news in America. His report was entirely to do with the Fed bail-out talks, and hardly mentioned Broon at all.
The most striking thing he said was that the mood in respect of the Credit Crunch was entirely different in the States - as well it might be. He said no-one who had not experienced it would understand the sombreness with which people were going about their business.
The real problem, of course, are the regulators who allowed Banks to create derivatives in the first place. Yes I know Real Estate prices in the States are falling.If you have a mortgage of say 60% and then take out a second mortgage for a further 30% - and then a personal loan of 10% as well - if the price falls even a penny you are in negative equity. If it falls 25% your first mortgage is coverd but the rest isn't. As long as you pay its all right. If you don't, the personal loan company loses 100%, the second mortgage loses half its money - but the primary mortgagee is OK.
The problem now is that there are layers on and within other layers - all passed back and forth and round about, so that even the primary mortgagees don't have cover.
During the secondary banking crisis of 74-76 in the UK, this is exactly what the problem was. The Bank of England lifeboat enabled positions to be unwound and I think the BofE actually made a small profit overall - but a lot of overstretched banks went to the wall or were amalgamated. The difference is that interest only mortgages were almost unknown then so that the banks were at least getting an element of their capital back, and, frankly, no-one had much money anyway. Nowadays, virtually everything we " own" is bought with borrowed money - certainly at the lower end of the social scale and within younger age groups. In reality we are "poorer" than we were then.
It is most instructive to follow the chronology - from 1971 when Banks liquidity requirements were reduced, property prices surging in 1972 and 3, Bank shares starting to fall in mid 1973, liquidity drying up at the end of the year with a mini-budget which squeezed the public. 1974 was utterly dire and at the start of 1975 the FTSE was at 146. So even now its grown some 35 times. The lifeboat peaked in March/April 1975 and started to fall thereafter as companies managed to access other money and money started to circulate round the system again. By mid 1976 things were beginning to get back to normal.
So now is very much like then - with bigger numbers. It shows why the liquidity issue is the one that counts.
So I am seriously pessimistic about the next year or two.
I'm busy working on an escape plan which involves gold coins and vegetables.
PS
I met a surveyor I hadn't seen for some years this afternoon. He was actively touting for business - as in, you have money, you want buy? He says this is the only way the market will get going again, with those with a bit of cash buying up distressed assets. His touting had led one invester to pick up a brand new block of 27, 1& 2 bedroom flats in a good location for £85,000 each. They had been on the market for £149,000 and £169,000 - with not one sold since launch in February.
We're definitely into the " There is no combination of circumstances under which we will accept that price.." scenario.
Except they will eventually when the next interest bill is due.
PPS
Ecomosts will tell you that the growth of money is extremely important.What has been happening recently is that the growth of money has been falling ( probably for the first time in more than 15 years) and may well have started to contract ( we wont know for a minth or so).
Much more importantly, as far as business is concerned, is the rate at which money circulates around the system, called velocity of money.