The credit crunch settles in

Investors are beginning to realise that the credit crisis isn't going anywhere. Meanwhile, as the housing market weakens further and defaults rise, losses are spreading beyond subprime.

"A climate of gloom" has descended on equities, says Dave Shellock in the FT. Stocks headed back towards their lows for the year early this week as US recession fears deepened.

Jobless claims are up, consumer spending is stalling, and the residential housing weakness is spreading across the building industry. America is in recession, inflation could ignite in a "serious way", and shares looked set to get cheaper, says Warren Buffett.

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