$700 Billion against a deleveraging $1000 trillion

Here are extracts from the conventional market "wisdom" now :

Remember a year ago, when the credit crisis started in Aug 07, a banker said ‘the deleveraging will not be denied.' How true that has proved to be.

Using some basic math, I count total US and ECB temporary lending injections at $3 trillion so far. It's failing to stop deleveraging. It's simple math really, $3 trillion thrown against a deleveraging $1000 trillion is not much. The central banks can lend money to banks, even taking bad assets as collateral, but it does not force lenders to lend to one another. They all know that, the truth be told, no one is admitting the extent of the bad paper they hold. So, they won't lend in interbank lending markets, and Libor rates skyrocket. That effectively negates interest rate cuts by the central banks.

Stagflation is commodity bullish, but deflation is not.

The investing mantra, that the world economy will drive basic commodities relentlessly up, is what we heard for the last 5 years, but the markets are saying that is old hat. What's new hat is a contracting world economy and debt deflation. But it's typical for the economic commentary and thinking to be 6 months behind seeing the obvious, that the investing climate has now changed decidedly away from the general ‘economic growth to infinity' paradigm we heard for the last 5 years.