The financial crisis - It's deeper than they know.

Wachovia, WAMU were like large beached whales caught in the outgoing tide.

So bigger whales farther out in the deeper water are taking over their fallen brothers.

But what is the point of creating ever bigger whales, any one of which has the expanded capacity to do even greater harm than the smaller ones they absorbed?

Let's change metaphors now and call these bigger whales in the deeper water ships. How long can these ships continue to take on water before they sink too?

As I have said before, one of the major trends causing the financial calamity - other than fraud and unbridaled greed- is that the investment-bank led destruction of jobs through foreign outsourcing, combined with deliberately open borders to bring in cheap foreign labor, has caused wage stagflation.

But the usury system requires ever inflating wages so that borrowers can keep up with usury payments. Otherwise, the lenders would eventually soak up all the money. That is the role of the "inflation fighting Fed": to continually inflate money supply. It has done so admirably, driving the value of a dollar down to a nickle since 1913. (Don't argue that government causes inflation because it could not do so unless the privately-owned Fed accomodates guvmint and prints the money that the government then borrows, agreeing to pay back interest. Ralistically, the government turned over the money printing operation to the central bank.).

The banking system needs inflation to keep the system running.
But the current wage stagflation has hit that need head on and it was the banks that are caving in, due to the resulting deflation.

The Fed can inflate all it wants and pump that into the lenders - but it does no good. The borrowers wallets have to be inflated and they aren't. so banking appears to be doomed ala 1929 - 1933.

Bank A is not loaning to Bank B because Bank A knows that when Bank B gives the money to Company C to build inventory, Company C's customers can't get money from Bank D to buy the product because of tighter lending standards, so Company C won't be able to pay back to Bank B who will not be able to pay back Bank A.

The situation is so simple to figure out. And impossible to solve without the entire economy shrinking its balance sheets, with all the accompanying pain.