Analysis
By Stephanie Flanders
Economics Editor, BBC News
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| A glut of unsold homes is depressing US house prices. "We're all sub-prime now" Kevin Logan, Dresdner Kleinwort |
And the US central bank, the Federal Reserve, is throwing away the rule book to contain the effects.
Kevin Logan of Dresdner Kleinwort, one of the less gloomy New York economists, summarises the state of play as the credit crunch has spread to different types of assets as follows: "We're all sub-prime now".
The Fed will almost certainly cut its main interest rate on Tuesday for the fifth time since September - possibly by as much as one percentage point, to 2%.
That would be a big deal: it would mean that interest rates were actually negative in real terms.
But amid the drama of the past few weeks, it almost seems par for the course.
Whether it's rate cuts or special funding arrangements for Wall Street, the more the Fed does, the more the markets seem to need.
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