I live in Australia where people still seem to think China and India will make us immune to the subprime melt down. I beg to differ but real estate here is still going through the roof. I am amazed how the main stream media gloss over the economic predicament the US and world economy is facing. Just consider the economic data this time last year compared to now. It is like chalk and cheese. The frightening thing is that none of the presidential hopefuls appear to see the core issues of the problem. Too much ever increasing government and private debt and an economy dependent on massive consumer spending plus excess liquidity to drive up asset inflation. An unsustainable economic black hole. (I won't mention the war or inflation.)

You can't implement the solution if you can't identify the problem.

I am amused how all these self proclaimed capitalists become frantic socialists running to the government nipple when their bets go bad.

How bad is it in your estimation? A big capital "R" Recession no matter how much government stimulus? One thing for sure is that Helicopter Ben can't reduce interest rates lower than 0%.

Edward, Abergowrie, Australia

One area that gets little coverage is the impact of the mortgage meltdown on the holders of 2nd mortgages/TDs.
Many borrowers got "piggyback" 2nds on purchasing a home,and homeowners took out a lot of home equity loans in in the past several years.

With the prices on homes coming down, holders of 2nds have
little or no protection in case of default on the first mortgage, and will lose 100% of the value of their loans. The holder of
the first mortgage can foreclose and recover a major portion
of the balance owed. Holders of 2nds are likely to be "sold
out" and recover NOTHING. Many of these loans are held by
banks and credit unions - there may be a big surprise coming.

Analysts and investors need to take a closer look. The Federal Reserve has reported that purchases in 2005-6
involved a 2nd TD/mortgage in over 20% of the transactions.
Looks like another "black hole" to me with billions of dollars
in the loss column.

Phil Reynolds, Rancho Murieta, California

Real estate investing isn't inherently worse than any other type of investing. The problem was that institutions were investing without understanding the risks and without taking adequate measures to protect against these risks.

The problem wasn't that the Fed made money too cheap, the problem was with lenders who, empowered by securitizations, made money to easy to get. This isn't about teaser rates on loans. It's about high LTV, high DTI, low FICO loans with no income verification.

Dan, Shreveport, LA

I wish I could be shocked by this. Just a little bit. My small bit of to-date-inconsequential satisfaction has been to vote against all US incumbents.

Rick, Orlando, USA

As in every boom and bust since the Federal Reserve came into existence, bank profits are privatized and losses are socialized. Taxpayers should prepare for a historical wealth transfer.

Jerry Davis, Kannapolis, NC

I think we are about to see what the current Fed is made of.
The consumer is stuck with his debt, and no help will be forthcoming. So any solution to the credit crisis will be for the benefit of the commercial and investment banks.
What difference does it make to the nation at large whether another LBO ever happens or whether another CDS is ever traded? What difference does it make if every firm on Wall Street has to cut its salaries, bonuses, and dividends to the bone?
The Fed will either release a flood of liquidity in order to refloat all the beached whales of Wall Street, and in the process create a tsunami of inflation, or it will show some balls and make all bear the burden in proportion to the gains they have made by its own ruinous policy.

Howard Johnson, Knoxville, TN

These 3 letter credit packages have to be worth something,
maybe 60 cents on the dollar.They are houses somewhere
which are assets. Maybe this will keep wall street out of houses for at least 10 years.

Joe Sixpack, Peoria Il.,