what really is a depression or a recession, page-6

craig65 I think you are asking the right question. I think the answer is that this is the failure of the business model of fractional banking, government price fixing of interest rates, credit default swaps and over the counter derivatives. Also the financial engineering by-passed the banking system. What has happened is this business model imploded quickly enough to threaten the banks and therefore the social order.

AIG the worlds largest insurer went bust. The investment banks went bust. Banks have been going broke. Countries like Iceland went broke overnight. Their high leverage model relies on credit expansion. A sharp contraction of credit (recession/depression) can bust them. The stimulus package is a banking system bailout rather than a bailout of the real economy.