UK Telegraph headline: US mortgage crisis goes into meltdown

Boy, reading the paper today and seeing words like "meltdown" and "panic" I thought I was reading HP, not the MSM.

Yes, folks, the Great Unwinding is here. And now it's being reported in some quarters outside the US - while most of the US MSM sleeps. Don't wan't to upset those advertisers you know...

US mortgage crisis goes into meltdown

Panic has begun to sweep the sub-prime mortgage sector in the United States after the bankruptcy of 22 lenders over the past two months, setting off mass liquidation of housing loans packaged as securities.

Analysts say the housing bust is pulling America into recession, citing a 14.4pc drop in housing starts

The rapid deterioration could not come at a worse time for British bank HSBC, which has set aside $10.5bn (£5.4bn) to cover bad loans in the US.

The cost of insuring against default on these loans has rocketed in recent weeks, from 50 basis points over Libor to 1,200, raising fears that a credit crunch could spread to the rest of the property market.

Peter Schiff, head of Euro Pacific Capital, said the sector was in an unstoppable meltdown.

"It's a self-perpetuating spiral: as sub-prime companies tighten lending they create even more defaults," he said.

Mr Roubini said: "America faces a 'reverse cycle' where a credit crunch has hit before the slowdown, a rare pattern. Normally, recession comes first, setting off credit troubles in its wake. We have a housing recession, an auto recession, a manufacturing recession, and a real investment recession already present. If all this happening in what the consensus terms as a 'Goldilocks economy', what would happen if the economy slows down?"