Frazzled governments were once again putting out fires overnight; a guarantee of bank deposits there, urgent talks on divvying up Wachovia here. This didn't stop Asian stocks from plunging 3% to 5%. Europe was looking no better. The global credit contagion was spreading rapidly to the countries and companies most heavily in debt and to the lenders most at risk, from South Korea to Iceland and from Germany's Hypo Real Estate back to Ohio's National City.

Derivatives guru and vindicated prognosticator of the calamity upon us, Satyajit Das, cheerfully titled his blog post Saturday "End of the Beginning," which in the context of this crisis means we're still some ways off from the beginning of the end. Das borrows some gallows humor from Lily Tomlin to clarify the take-away: "Things are going to get a lot worse before they are going to get worse."

This morning Das was at it again, citing Springsteen as well as Yeats to get readers of Australia's Business Spectator properly depressed. But the money quote in that piece was a Depression-era explanation of the goings on as offered to Herbert Hooover by his Treasury Secretary: "Liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system..."

Das persuasively argues that we're not there yet, and in fact far from it as the deleveraging and the resulting credit crunch in the financial sector choke the rest of the global economy, requiring more deleveraging still. What's curious is that despite describing the global nature of the problem so well, Das still falls into the camp that sees the crisis as particularly bad news for the U.S. and for the U.S. dollar.

Meanwhile, the Australian dollar Das uses at home in Sydney was falling 4% against the greenback overnight and 5% against the yen, on expectations of a rate cut by the antipodean central bank Tuesday. Despite the boost from the recently busted commodity boom, Australia is still running a current-account deficit, and has relied on high interest rates to draw in leveraged capital from abroad. Now that carry trade has soured as quickly as a 2006-vintage mortgage.

In fact, Australia's real estate looks a lot like America's did in 2006, with nationwide home prices at historic highs yet the most overheated regions already in retreat. Except that the median sale price in Australia is now above $340,000 U.S., or nearly 50% more than the average American home fetched at our bubble's peak. Perhaps Australia's demographic advantages explain everything, but more likely their turn is coming. As recently as a year ago Australia's real estate lending clearly had that bubblicious feel, from slipping underwriting standards to the soaring debt-to-income and housing-costs-to income ratios.

At it's not just Australia, of course. The desert dreamers in Dubai are starting to feel less good about all their gleaming new skyscrapers and man-made islands too, according to The Wall Street Journal. China, which was has tried to curb real-estate speculation for years, has also changed its tune of late and started looking for ways to keep it going.

Meanwhile, the New York Times opened my eyes the other day by showing what $1.3 million buys these days in Tuscany's declining market. Tuscany sounded very romantic to all the Anglo-Saxons who can't afford it anymore, and clearly it can still attract plenty of newer money (though the Russians, for one, are having their own credit issues now, having borrowed a little too aggressively against their petrodollars.) But still: $1.3 million for that? Nice as Tuscan countryside no doubt is, it's not five times nicer than New England countryside, I'd bet. The entire property is just a quarter-acre, too. No wonder European banks are in trouble.

There are more signs of property deflation everywhere one looks, from Bulgaria to Mexico and Mumbai. The temptation would be to conclude that we've already done our penance. But it's probably more than case that others haven't.