My favourite quote of the week comes from Jeff Rosenberg, one of the top strategists at Bank of America: "If 2007 was the year of sub-prime, 2008 should count as the year for everything else."
That would seem to sum up what is happening in the US right now – witness the apparent implosion of the government-sponsored mortgage banks Fannie Mae and Freddie Mac.
What is being witnessed there is that expectations on mortgage-related losses are actually accelerating rather than flattening out, which reflects a combination of rising delinquency rates among struggling borrowers and a continuing decline in US house prices. Quite clearly, that becomes an increasingly large and wider spread credit issue – ratcheting up the pressure on the US financial system at large.
Don't let anyone tell you that the great credit crisis is going to come to an end in the West any time soon.