Watch those markets closely; as the Financial Times said in its headline on the weekend, "Gloom envelopes world markets".
And there's more to come. The gloom is deepest in the US.
First Wachovia, Bank of America and JP Morgan Chase said they would be hit by billions of dollars of losses in the fourth quarter: this was on top of reports last week from Washington Mutual, America's biggest savings and loan group and Morgan Stanley, that they also faced billions more than forecast or expected in losses from the toxic subprime investments they had made.
As well, speculation is rising that huge global bank, HSBC, will also reveal new losses for its subprime mortgage loans and other dealings in the US when it reports profits this week.
HSBC was the first major bank to report problems with subprime mortgages and the associated CDO credit derivatives in February and March. It put aside around $US10.8 billion to cover losses in those deals and other parts of its lending book in the US and around the world.
Stockmarkets on both sides of the Atlantic took a pounding last week and finished the worst week in months on Friday as deepening economic gloom raised expectations that the US Federal Reserve would be forced to cut rates again in the face of mounting credit losses.
Investors quit shares for oil, gold, US government bonds but not copper, which fell. The yield on the 10 year US Government bond fell to 4.23%, the lowest for more than 2 years and more than 1% under the peak of 5.32% reached in the first week of June.
Investors also bought yen which rose against most major currencies; the value of high yield currencies like the Aussie and Kiwi dollars fell sharply Friday night.
The Aussie dollar lost 2 USc in value, a steep fall which hit the value of the BHP bid for Rio Tinto, cutting the Australian dollar value of both companies shares based on their London close (see story below).
Some analysts suggested that sentiment is now gloomier than it was during the August credit freeze with US investor concerns about the worsening state of the US economy.
More figures this week will test sentiment on inflation and home sales.
Analysts say the losses keep coming for big and small groups, and there are rumours big banks in Britain and Japan could surprise with huge losses.
Figures in London media at the weekend said that Britain's big eight banks had shed $A300 billion in market capitalisation in the past year (that's more than the market cap of CBA, NAB, ANZ, Westpac and St George) because of the subprime woes, and the collapse of Northern Rock bank and its rescue by the Bank of England.
The move by investors into oil and gold took them to historic or near historic highs, but copper weakened sharply and is now in the midst of its worst slump since 2002.
The Dow tumbled 223.55 or 1.7% on Friday to 13,042.74, as retailers, banks and consumer products companies shed value. The Dow has dropped 361 points on midweek.
Tech stocks, which have supported much of the US market for most of this year, got a dose of the shakes with reports of slowing demand from the financial sector, usually a huge buyer of computers, software and internet products, and falling demand for mobile phones and services.
The NASDAQ lost 68.06, or 2.5% to 2,627.94. The Standard & Poor's 500 index fell 21.07 or 1.4% to 1,453.70. That was a fall of 3.7% last week.
NASDAQ had its worst week since April 2002, losing 6.5% in value, and the Dow lost 4.1%.
In London, the FTSE100 fell 3.7%, while the FTSE Eurofirst 300 was down 3.1%: the biggest falls since the credit freeze started taking hold in late July and early August.
In the US the yield on the two-year Treasury note fell to 3.41%, the lowest since February 2005 while the yield on the bellwether 10 year Bond tumbled to 4.23%.
US reports say the turmoil on Friday came from several sources:
The most worrying was the emergence of fire sales of mortgage assets from complex debt vehicles (such as conduits and SIVs) after the trustee of a $US 1.5 billion debt deal managed by State Street Global Advisors, started liquidating its portfolio.
These fire sales follow the downgrade of ratings on subprime mortgage linked securities and funding deals. Trustees are reported to have issued default notices for more than 14 collateralised debt obligation deals in recent weeks, representing securities with a face value of more than $US10 billion.
The fear is that these fire sales will see very low market values established, which will in turn force big banks and other investors to make further write-downs in the value of similar securities they are carrying on their balance sheets.
It could be a real downward spiral of falling values and write-downs feeding off each other.
US analysts say default means the holders of the most highly rated (and secured) securities, usually AAA or AA in the CDO can sell the underlying assets to try and get their money back. Analysts say more deals are on the brink of default.
More factors in Friday's nervousness included news from Wachovia, America's fourth biggest bank, which estimated the value of its subprime mortgage securities fell $US1.1 billion last month and said it was increasing loan loss provisions because of "dramatic declines" in house prices in some parts of the US.
Bank of America and JPMorgan Chase also warned in regulatory filings that they could face further write-downs in the fourth quarter.
Fannie Mae, the government-sponsored mortgage company, said its third-quarter loss doubled to $1.52 billion and Credit One, the leading credit card issuer, said more customers had difficulty paying their bills in October than in the third quarter: that was two days after it said it had lifted its provision for such bad debts to the 'mid five billions
