Good post CW, I think you've more-or-less nailed it. My view is at-call deposit rates and term-deposit rates will serve as a good indicator of the local bank's difficulties in securing finance. I fully expect KRudd to re-institute the bank guarantee if things get hairy again, but my expectation is borrowing and depositor rates will rise anyway.
US gov't bonds continue to defy belief, but European rates are beginning to reflect the fundamentals, that is, higher return to compensate for default risk &/or inflation.
As an aside, here's more evidence to support the original tone of this thread, specifically, Virgin Blue flames-out with a significant profit downgrade because of falling tourist revenue - thats a big deflationary signal right there.
