WE ARE IN A BAD FIX

Still the champagne flowed. Lip-smacking advertorials continued to gush over "securities," "derivatives," and "comprehensive financial suites," set in a Jacuzzi lilting to Ponzi's version of "money for nothing and chicks for free."

The pyramids may come crashing down, but the missing capstones are free to roam, investing in gold here, financial products there and junk bonds everywhere.

To avert a panic run though, central banks worldwide pumped $400 billion to maintain liquidity's equilibrium.

Stock markets were no longer in the bearish or bullish mode; rather they were cancroidal, allowing fund managers to sidewheel from one market to another in search of profits, suckers, and a subtle pullout before the big bang.

It was the dawn of the crab, of cancer in stock market terminology, if one was needed. Suspicions were mounting. European banks were facing insolvency.

For three days beginning Sept. 14, savers across the United Kingdom removed £2 billion ($4 billion) from Northern Rock, Britain's fifth largest lender. The Bank of England had to step in to guarantee all deposits in all banks – a move with little or no precedence.

However, the banks were not convinced either. Inter-bank lending, which profitably cycled cash from one bank to another as demand dictated, was now deemed an inter-bank debt trap. Available cash was hoarded up.

The Bank of England's cash auction of £10bn -- at a rate of 6.75% over three-months -- has been shunned for the third consecutive week.

Either the "have yachts" have sailed away, or banks may actually find it difficult to repay the Bank of England.

Worldwide, the full weight of the "asset-backed" collateralized debt obligations (CDOs) and structured investment vehicles (SIVs) may run into more than the $400 billion which central banks coughed up to keep the system afloat.

CDOs and SIVs are the sleek-sounding trillion-dollar apexes built on loans taken from simple homeowners.

Banks are still tallying what is real and redeemable, and what was created and whirling in thin air. Their best bet now is for a deux ex machina.

Bull in the China Shop

The biggest economic success story of our times was the product of Western consumerism. It created a real supply and demand situation, which forced the relocation of factories to the Third World of cheap labor.

China was the champion recipient. Demand for toys, screws, machinery, computers and cellphones could never ebb, whether it came leaded or unleaded. Beijing's policymakers decided that the perennial flow of greenbacks demanded a domestic infrastructural revolution dictated by the export market -- a first in history if there was one.

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