WHILE the world stands transfixed by the US elections, the eurozone is busily imploding economically.
And this time the difficulty isn't so much being driven by the troubles in Greece, Spain and elsewhere, but is reflecting a stark underlying weakness which will complicate already thorny structural problems.
Recent data on bank lending -- still central to the European economy -- shows an old-fashioned, flat-out recession deepening, with banks and borrowers both backing away from credit as quickly as their little legs will carry them.
The situation cries out for action to weaken the euro from the European Central Bank, which is widely expected to do exactly nothing at its policy meeting today.
Perhaps the only good news is that the markets, recognising the issues, are trading the value of the euro lower, making some slight difference in competitiveness and external demand.
Data released last week shows eurozone manufacturing shrinking for the 16th month in a row, but the real horror show last week was in an ECB survey of bank loan officers.
Compared to the second quarter, loan conditions were 15pc tighter in July-August, with banks charging more, demanding more collateral and being especially tough on riskier loans.
While banks mostly blamed the dismal outlook for their unwillingness to lend, lending conditions were also made worse by how expensive bank capital has become.
Few want to commit capital to banks, but bank regulators are demanding more capital.
This is probably wise, but the upshot is a real credit crunch. And the outlook, bankers say, is for more of the same between now and the end of the year.
We are probably hearing less about this than we otherwise would because companies themselves are not keen to borrow, seeing less profit in making new investment and being wary of extending themselves going into what may be a multi-year recession.
A separate survey of small and medium-sized companies showed they are finding it increasingly difficult to get loans, with 18pc calling access to financing their main problem.
Compared to the year before, the amount of loans made to the private sector in September shrank by 1.3pc, with loans to corporations shrinking at double the rate in that month compared to August.
It is hard to overstate just how bad these numbers are. The eurozone economy relies heavily on bank loans, but its banking system is both unwilling and largely unable to provide finance.
Even if financing were cheap and easy, businesses have little motivation to take it up.
In pledging in late July to provide whatever was needed to support the euro, ECB chief Mario Draghi vastly reduced the risk of break-up, but didn't do enough, in reality, to improve conditions on the ground.
In actuality, Draghi's pledge helped to underwrite a sharp rise in the value of the euro, the last thing the economy of the currency zone needs.
Even after recent falls, the euro is still about 6.5pc stronger against the dollar than its July lows. Further falls would be welcome, but the ECB may prove reluctant to jawbone its currency lower, fearing that it looks weak and overly pliant in the process.
The problem for the ECB is that, having stepped rather far out on a limb in supporting the euro project, it could easily find itself waiting too long for institutional solutions to fast-moving economic deterioration.
Just this week we will have two key votes in Greece on austerity measures, and it is already manifest that Greece will need some combination of extra time, money and reduced debt.
At the same time, the central bank faces questions, most recently raised in German media, over how rigorously it is applying its own rules over collateral presented to it by Spanish banks for loans.
All of this may make it difficult for the ECB to feel it can safely take extra steps to support growth.
Almost throughout the crisis the ECB has erred in being too hawkish, fighting the phantom of inflation while structural and debt problems sent waves of deflation through the eurozone economy and out into the world.
And to be sure, on the currency front, the ECB's job has been made more difficult by the fact that both the Federal Reserve and Bank of Japan have moved in recent months to expand or extend bond-buying programmes.
If the ECB takes today's press conference as an opportunity to spell out when and how it will implement its new bond-purchase programme, a perverse impact could actually be to drive the euro higher even while it lowers financing costs for eurozone sovereigns.
Getting real-world interest rates to fall, improving the transmission of monetary policy, may not be enough. The ECB needs to heat up its side of the global currency war. (Reuters)