Great post and summary of the problem by Denninger, yet again
"Simply put the problem is too much spending. The Keynesian prescription only works when there is additional debt service capacity in the private sector - when that is exhausted then the engine that is necessary to turn pump-priming into expansion (that is, private credit expansion) is absent and you are simply throwing the stimulus money down a black hole.
This recession began with the exhaustion of private debt-service capacity. It is for this reason that all the claimed Keynesian "solutions" have not and cannot work - there is simply no more margin between debt service capacity and outstanding debt levels in the private economy. This is proved month after month as bank credit continues to contract and consumer debt loads come down month after month."
Red-Ink Tsunami: Why Old Ideas Can't Fix the New Government Perma-Crisis "The decline in government revenue is unprecedented for any period on record going back to 1952”
Is America's financial collapse inevitable? "Somehow, we just missed ... that home prices don't go up forever."
Unofficial Problem Bank List increases to 576
Small Business Trends Suggest No Recovery On Horizon
Swiss Cheese Recovery, More Holes Than Cheese
Barney Frank - "Fannie and Freddie have collapsed...they are now in effect a public utility"