Once I had a railroad, made it run...

From the "Things that keep me up at night" File--this would be number 1.

Yet it is some of those very conditions-the slashing of consumer debt (or deleveraging), reticence to spend and general risk aversion-that helps drive Rosenberg's depression case.

"It will take time and shared burden by lenders, households and future generations of taxpayers before we hit bottom in this credit contraction," he wrote. "Time is certainly going to be a big part of the solution, and history tells us that the deleveraging cycles last years."

Indeed, ominous signs abound.

Strategists at Bank of America Merrill Lynch earlier this week published a note with the sub-heading of, "The chart that keeps us up at night." The particular chart in question tracks the bond yield differences, or spreads, in the European financial credit default swaps market .

The instruments are insurance against debt defaults and the spreads, BofAML says, have gone 0.70 percentage points or so beyond their levels at the 2008 financial crisis apex. The same spread for US financials is only about 0.40 percentage points away from late 2008, while high yield spreads are right at the point they were the day before Lehman Brothers went bankrupt.

Scary stuff, even for a firm saying that the chance of a recession remains below 50 percent.

"The experience of 2008 has taught us that once the level of distress in the financial system reaches a certain level, it can become an uncontrollable force, with the potential to push market participants into deleveraging as counterparty exposures are being cut," the firm said.

"We may not be at that point yet, but we believe we might not be too far away from it, and with the markets behaving the way they have over the past few weeks, we could get there quickly."

I strongly doubt Europe is going to get its act together--the way it has handled its debt contagion is reminiscent of the way Russian prisons have handled tuberculosis.

I'm finishing up this solid treatment of the Depression era, and have Amity Shlaes' work in the hopper next. The subject seems to be disturbingly topical, sad to say.

"May you live in interesting times."