Chancellor of the exchequer, Alistair Darling has stated at a G-7 forum that the credit crunch will be a “prolonged adjustment”.

Auditors for AIG, the world’s largest insurer is showing “material weakness” ovalues some of its complex financial instruments, specifically its, “credit-default swap portfolio”, see here and here.

Basically, it needs to write down more of its holdings in the big sh^%pile.

In related news, credit-default swaps are becoming more expensive across the markets, which reflects the standard risk/return equation. People find these riskier, so they are demanding higher yields.

In real estate, experts are saying that home prices will drop for 2 more years. I think that it will be 5+ years, at least adjusted for investment.

A Morgan Stanley analyst has stated the obvious, that Fannie Mae will be seeing a lot mroe defaults on its loans.

In personal finance, credit card companies are jacking up rates of credit worthy customers. It appears that they are looking for cash flow to offset losses in various financial derivatives and the mortgage market.

Rupert Murdoch Dow Jones is ajusting the Dow Jones Industrial Average, with Bank of America and Chevron replacing Honeywell and Altria.

This really does not mean much, after all the Dow is not really a good metric anyway, Honeywell has become too small, and with the spinoff of Kraft, Altria is pretty much just tobacco. Nothing to see here, move along.

Finally, I recommend that you check out this examination of the US financial position compared to meltdowns in 5 other counties. It’s kind of grim, as these charts show:
The Big Picture | 5 Historical Economic Crises and the U.S. look at pics”/>