Yesterday's Financial Times editorial picks up the Bank of International Settlements' warning of systemic financial crisis and upgrades it to "huge crisis".  Of course the prescribed course of action is some timely therapeutic bleeding of the working class - "a bit of economic pain", to be administered by central banks through monetary policy.  Less orthodox is the admission that "we" - i.e. initiates of neoclassical economics - knew little about "economic processes" a few decades ago and nothing at all now.  And who would have thought finance capital's chastened spokesmen would turn so mystical as to dream of "pre-emptive action" against "unknown unknowns"?!

Lots of unknowns
Healthy dose of scepticism from the central bankers' bank

A pertinent reminder that the so-called 'housing bubble' isn't just a matter of subprime foreclosures and repossessions: the buyers of the 'financial products' through which mortgage debt is abstracted and redivided at the outer limits of algorithmic calculation are none other than private pension funds, so that capital's 'no alternative' answer to the pseudo-problem of the 'demographic bomb' may yet manage to create a real 'pensions crisis' where none need have existed

Why the subprime bust will spread By Henry C K Liu

Further to the dominant theme of the last couple of weeks...
(from Prudent Bear: http://www.prudentbear.com/)

Christopher Laird is editor of the PrudentSquirrel newsletter.

http://www.prudentsquirrel.com/

With the unraveling of the Yen carry trade, a sequence of events has been set in motion for a world liquidity crisis. Combining this with ongoing pressure from US sub prime deterioration will further harm confidence in US and consequently Asian stock markets.

Not quite everything is made in China.  From Asia Times Online: http://www.atimes.com/atimes/Global_Economy/IC06Dj03.html

Some stories, such as corpse custody battles between sleazy lawyers and semi-literate Texas trailer trash et al, the US news media handle really well. On others, such as goings-on in the world's financial markets, they don't have a clue.

Thus the media saw the big February 27 decline in the Chinese stock market followed by a big decline in the US and in other world financial markets that same day, and decided that being coincident equaling being causative was a concept that the US public could get its mind around pretty easily. Suddenly it's all China's fault.