Whatever. The point is, this is the crash. We're in it now. And the people in charge have decided that the priority is to save the financial system. And they're pouring in liquidity in do it.

In fact, it appears that the ECB has been the most aggressive at injecting liquidity and the BoE the least aggressive. The result: no bank failures in the Eurozone, the Northern Rock disaster in the UK. And, as Chris Cook has revealed in his diaries, the BoE has even made matters worse by rescuing Northern Rock by reducing its regular lending to the rest of the banks by the same amount, thereby contributing to contracting credit and ensuring it would be impossible for any UK bank to actually take over NR even if they wanted to.

European Tribune: Bank of England & Northern Rock (by ChrisCook on February 12th, 2008)

There was then this startling admission

"These balances are a form of 'central bank money' and the Bank has taken steps to offset the creation of central bank money by lending less in its regular market operations than it would otherwise have done."

that the banking system is being starved of liquidity as a result of the (hugely profitable) harvesting by the Bank of England of "seignorage" in respect of its loans to Northern Rock. These profits arise out of the fact that the Bank of England is lending to Northern Rock at base rate (plus an accumulating penalty payable in due course to the Treasury) money which it is funding at zero cost.