It's a weighted index that gives greater emphasis to the areas where people spend a lot of money.
It does not re-weight every month simply based upon the basket of goods people actually purchase - it re-weights on a more periodic basis.
RPI fell through the floor as the mortgage repayment component has fallen to -2% next year; fuel is flat, but food inflation remains high.
RPI is not forecast to hit zero until the middle of next year. Going negative at all is a very serious issue - it is not the same as GDP contraction!
re TARP (US):
This is no supprise and was already predicted.
It ertainly was a surprise to everyone in the City - it is an indication of their flexibility, but is means that many of those dodgy assets have no floor price whatsoever now.
re VW:
Problem is that it is financed by shorter-term debt that is due and needs to be refinanced. Regardless of profits, it needs the cash asap to continue operations, and with the ECB handing it out (through VW's consumer credit arm) at better rates than the market, then they have taken this option.
Finally, if you take another look at today's FT - see this from Germany:
Germany’s recession is now set in black and white, confirmed by a 0.5 per cent fall in third-quarter gross domestic product. This was far worse than expected, with the real shocker being how badly exports have been hit as demand slumps worldwide. It is now fanciful to hope for any offsetting pick-up from emerging markets. Export growth, which was powering ahead strongly, could come to a complete halt next year.