http://www.ft.com/cms/s/0/7c453090-7ff7-11dc-b075-0000779fd2ac.html?nclick_check=1
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Poor quarterly results from banks across the US over the past two weeks suggest credit problems once confined to high-risk mortgage borrowers are spreading across the consumer landscape, posing new risks to the economy and weighing heavily on the markets.
US banks have raised reserves for loan losses by at least $6bn over the second quarter and by even larger amounts from last year, indicating financial executives believe consumers will be increasingly unable to make payments on a variety of loans.
Banks are adding to reserves not just for defaults on mortgages, but also on home equity loans, car loans and credit cards.
"What started out merely as a subprime problem has expanded more broadly in the mortgage space and problems are getting worse at a faster pace than many had expected," said Michael Mayo, Deutsche Bank analyst.
as people default they let it all go
its will be a great time to buy cheap assets
here is the troubling part
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"There has been a fast sea-change in thinking," said Rick Klingman, interest rate trader at BNP Paribas. "Stocks are showing some real concern about bank earnings and there are worries about credit in general."
I think these guys send out warning shots before the it hits the fan or maybe just the smart investors know the right signs and jump
but I think this is a sign
Trying to plug a hole in a dam that is about to break is always a fruitless activity.
Increased reserves were mandated after the S&L crash. It was still pennies against dollars loaned
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Jeff Tumbarello
H. G. Wells - "Human history becomes more and more a race between education and catastrophe."
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