No doubt the dynamics at work domestically will have to manifest themselves globally as well.

China will clearly be impacted by our decline in consumer spending but the Chinese are operating from a much stronger initial position given their government surplus.
Against that backdrop, their economy has benefitted much more rapidly from economic stimulus packages that have been implemented.

In terms of other “forms of banking”, private capital will ultimately find a means to get through clogged arteries. However, from a global standpoint the ultimate answer is TIME. New economic growth will slowly absorb the current losses in the system.

LD, Was not the IMF itself 4 billion in the hole?

Your analyisis extend to the global banking system I would venture that the points you make on the national level will manifest in “new models” in the global economy.

In terms of China, does not the decline in consumer consumption effect China as well? China’s exports are likley to be fickle and their currency manipulation will continue. As an a side, I am wondering,
in the evolution of world banking structure will other forms of banking gain an increase in funding levels in an effort to “get around” some of the current economic blood clots?

The piece of this that I agree with you the most on is that analysts and economists continue to forecast future economic activity (and stock market direction) based on past models. We are currently sailing through uncharted waters in many different ways. The Federal Reserve’s actions over the last 18 months are a great example of that. That doesn’t necessarily mean that this is a worse situation than we have faced before, it just means that it is a different situtaion than we have faced before, and that no one really knows where we are headed. As you said, we are moving to a whole new and fundamentally different economic system and economic model. In my opinion, any forecast, for either the economy or the stock market, that is based on past historical models is not a credible forecast.

Matt