Take a very deep breath. It looks almost certain that this week will be the one where we see the financial implosion in U.S. banking and brokerage that many have been expecting for some time. It reminds me a little of that awful feeling you have when you think you're going to vomit, but hold off for a surprisingly long time, knowing how dreadful the experience is going to be -- only to have nausea overwhelm you and be finally forced to say "f**k it" and hurl.
Marginally more seriously, the U.S. financial system last Friday and a few months from Friday looks like it will be a very different place. It will be smaller, less levered, more transparent, and have fewer people in the moving business of trading and banking. Dare I say it? The U.S. shadow banking system will soon be only a shadow of its shadowy self.
What that means for the rest of the economy is far from certain, but cash is more king than ever -- and there will be less of it extended as credit than at any time since Nixon was president.