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."
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