Bloomberg: Merrill, Goldman, MStanley `Junk'

Since this is what the U.S. housing market is doing to the world's three biggest securities firms, I'd say we're looking at contagion (caused by their weakening financial status harming their operations, including in London). Note also HBOS putting $11bn aside for its sub-prime lending in the U.S. Then there's the unwinding of Yen carry trades (estimated by the Economist as worth up to $1trn). The U.K. property market isn't going to be supported by the top end buyers for much longer as liquidity vanishes from the global system leaving the gut-rotting debt for Ordinary Joe. Banks, too, must be edgy about their lending practices over here when they've seen the harm the U.S. downturn can do. It's time to stick or twist for the banks. Some will stick, and that will be enough. Keep the faith.