Subprime rot is starting to spread

G7 finance chiefs announced that subprime write-offs could reach $400bn, so where is all that bad debt hiding? Japanese banks will have to come clean by the end of March, but Europe may in fact be a likelier candidate for subprime mayhem.

Even after an atrocious month for markets in January, the grim reality that faces the global economy appears to be only slowly dawning on investors.

A brief attempt at a rally at the start of February was swiftly crushed by data suggesting that the US services sector was shrinking for the first time in five years.

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