The problems of troubled loans in the subprime mortgage market for homes now appear to be extending to automobile loans and credit card debt where default levels are rising. As reported by the Financial Times, “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.”

As one bank analyst put it, credit “problems are getting worse at a faster pace than anyone expected.”

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