The music has stopped and Wall Street has no chair. [View All]

Carnage on Wall Street as loans go bad
By Steve Schifferes
Economics reporter, BBC News, New York


SUB-PRIME CRISIS SERIES
Foreclosures are spreading to areas like Los Angeles, depressing prices
The scale of the losses that will hit Wall Street banks could approach half a trillion dollars as large numbers of sub-prime home loans go bad.

And the carnage in the financial markets could cause a credit squeeze that will dampen economic growth for years to come.

The US sub-prime crisis is leading to a wave of foreclosures across the US that is having a devastating effect on the US housing market, and is likely to lead to the halving of the US economic growth rate in the next six months.

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But since 9 August, bondholders have effectively gone on strike, refusing to buy some $2.8 trillion worth of sub-prime, Alt-A, and other types of securities not guaranteed by government-sponsored agencies.

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And they thought Junior was going to bring Heaven on Earth.....