SharpShooter,
What you see is "wealth destruction" and, to the extent that it has been financed via debt, you also see debt destruction.
It's true that you see a deflation in asset values; in the values of banking institutions; in property prices. However, that is not the way in which "deflation" is defined in the economic textbooks.
Deflation is a decline in the general price levels. Now, I shop every week. The prices of my milk, bread, meat, vege's, newspapers, etc. haven't declined. Therefore, the average price levels haven't declined.
What has declined, is the bubble-like prices of everything that could be debt-funded. In other words: houses; shares; businesses; government spending; etc. That's where you see "deflation".
You don't see deflation in the things "that matter" - the things you need every day, in order to survive. As a result, you know that your wage doesn't buy more bread or milk.
What does this mean? It means that a section of our economy, which originally grew up to support the productive sectors, but eventually grew so big that it massively outweighed the productive elements, is now shrinking back to a more realistic size. The problem is, that these sectors employed so many direct and indirect participants, that they shrinkage will hurt like all buggery and will also probably take a few years.
Here's a graphic, which shows where we have been and were we need to go (note the size of the respective bubbles):-
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