“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fedâ€™s moves are going to work, it will not show up until the later part of 2008 or 2009.”
It was only a few weeks ago that most analysts were still saying there would be no recession. Blogs like Calculated Risk, Mish’s Global Economic Trend Analysis, The Big Picture were way ahead of mainstream financial news media in accurately reporting the financial devastation triggered by subprime.
Merrill Lynch and Citigroup are expected to write off “tens of billions,” a number that keeps growing, when they report earnings this week. No one really knows how much more of this toxic debt is out there. This is one reason that interbank lending rates have risen sharply, no one trusts the financial stability of any one else now.