How can interbank lending be frozen while other types of lending are ok?
Here's my opinion:
It's a sign of the CDS meltdown. The banks trust their customers to repay their debts more than they trust each other to stay solvent.
I think this credit crisis will spread some, especially if more banks closed. However, we don't need to patch over that debt; we need to burn it.
UPDATE: A Fox News talking head said "we're too much in debt. Let's give them more." Yeah, right....