The real underlying problem is intangible - it's a loss of trust - in politicians, financial institutions, and in each other.

Several years ago - maybe 10 - Rabbi Sachs (I think it was) gave a 'Thought for the Day' on Radio 4 in which he laid out very clearly the consequences for the markets and for society of a loss of trust. It would be nice to hear it again, now.

MarkS, Leeds,

This housing loan problem is actually only a symptom of the real disease, which is the terrible greed which was loosed without restraints in the 1980's in America in the financial sectors, including the stock markets by Ronald Reagan and his ultra-right cronies.
The wealth of the planet is limited, and therefore the money supply. If Billionaires take 90% of this limited wealth for themselves, only 10% is left for the other 96% of the population. Wages were blocked for 20 years.Huge numbers of illegals were allowed in to benefit the Corporate farmers, the restaurant and service sector. Factories were built in foreign countries to avoid unions and legal protections. Each of these manoeuvres took income from the poor and middle class, and placed it with the minority Rich. Taxes were diminished for the Rich. Now there is no extra money to buy houses, cars or washing machines. No money for the majority of ordinary workers equals national financial collapse.

Victor Compton, Cherbourg, France

The headline to this article is misleading and Mr Enrnst should not be allowed the publicity it will bring ....the 'big' picture is nothing like Mr Enrnst would have us believe and his comments , and the sensationalist style of reporting them , merely add to the 'confusion' about the fall out from the sub prime market .

philip morgan, Dubai, UAE

With regard to the person who made a sarcastic remark about the Federal reserve being privately owned I have the following to say:

The Federal Reserve was founded in 1913 as four regional banks owned by the banks themselves. It was later extended to 12 regional banks. This was the first Central Bank in the US since 1836 when the then President - Jackson - succeded in persuading Congress not to extend the life of America's third Central Bank, which was 80 per cent privatley owned.

The Bank of England was privatley owned from 1694 until 1946 when it was supposedly nationalised.

having control of the money supply is vital to bankers.

Alan Heaton, Dreieich, Germany

Pete,
Just remember that Greenspan said there wasn't anything wrong in the housing market for the longest time and then after the top he said there may be "a little froth" .
Now he is giving talks on how these massive bubbles have been happening for hundreds of years and that the fed has no control over them, that they need to just play themselves out.
Since world economies are so closely linked I would not be surprised if UK were next.

B, NYC, USA

I think you may be missing something. The big move wanted by FNMA is to increase overall lending, not just individual loan sizes.

Richard Schweitzer, Atlanta, USA

Sorry to piggyback on this issue, but the US is currently borrowing three billion dollars each week for a fiasco in Iraq. Financial issues are cumulative. A major part of the Bush disaster is the vast fianacial incompetance of his administration which was most centrally focused upon huge tax cuts for the centimillionaire class in America. They have greatly played their part in ballooning debt. So combined with the regular cycles of business corruption, it seems the dreaded "D" word as Mr. Livesey of Sunnyvale CA mentions, looms ever larger. Thank you, George W. Bush. Not.

Tarquinis, Seattle, USA

I can sum up the credit crisis in four words:

CORPORATE AND CONSUMER GREED

Most wealthy people "can never have enough money, but they want more." Same is true for corporations.

End of story. GREED.

J. S. C., Monmouth, Maine

"Although the company [Freddie Mac] is privately owned..."

I challenge anyone to produce a list of the "owners." Privately owned, my foot. Just like the Federal Reserve, right?

Rick, Orlando, FL

Read my lips , There is no sub prime problem over here. The Council of Mortgage Lenders and David Smith Learned Economist at the Times have assured us of this...

Pete Balchin, Solicitor , Bristol, UK

It is important to remember that the gov is using
tax payers money or debt to be paid in the future
tax payers. This redujces the value of the currency
in the market place. As Einstein said " You cannot do only one thing."

J Parker, Montrose,

The government DOES NOT need to increase the mortgage level any higher than the current $417,000. Most subprime mortgages under duress are nowheres near that amount. People who,in congress, want the limit raised are saving their own butts or their rich buddies "loans on speculation"; the second home. No, raising the limits is nothing but a tax bailout for the more wealthy that took a chance and lost! Las Vegas doen not return money on a bad bet and the government should not bail out a bad financial decision by speclulators. Sorry Charlie, only the truely needly need to apply.

henry joe, jax, FL

And who pays? The taxpayer.

SD_Scott, Craptown, USA

Since you have mentioned the dreaded 'D' word, let's recall that the Great Contraction lasted from late 1929 to 1933, including two Bank panics, one year apart, and false recoveries were seen more than once. It's early days, yet.

jon livesey, Sunnyvale, CA/US