So here are some economic updates.

First, it appears that the first major bank casualty of the housing bust is upon, Northern Rock, a bank which is responsible for about one in five mortgages in the UK. They have apparently been done in by a 1930s style run on the bank. They got some temporary liquidity through a £24 Billion (about $US 50 Billion) loan from the land of England, but it still appears that they are headed for liquidation, with the Tory shadow of the chancellor of the exchequer^* George Osborne asking that, “The chancellor had not explained how taxpayers would get their money back.” The testimony of the CEO of Northern Rock, is more concerning though:

He told the Treasury Select Committee that the bank had planned how it would cope with a 40% fall in house prices.

But it had not planned how to respond if its ability to borrow dried up.

“What wasn’t stress-tested was the event deemed implausible – of the global markets freezing up overnight,” he said.

“The rapid and long-lasting closure of the global markets was not stress-tested,” he added.

Basically, we have a world capital market that resembles juggling, and if you lose one ball, others follow.

On top of this, we have a new home builders survey that is positively grim. The current outlook remains at a record low, but the 6 month outlook looks grim.

On the more macro level, we have Countrywide shares plunging as the insurance rates it must pay on its loans jumped by 30 % (!), both Fannie Mae and Freddie Mac taking major hits because about the security of their mortgages (here and here), and Citigroup faces $15 billion write down in addition to having the good fortune of Goldman Sacks downgrading them to “sell” from “neutral”.

In consumer spending, auto sales could hit 15-year low.

^*It’s an artifact of the parliamentary system that the minority party has a shadow cabinet, which is there to keep the various minister’s feet to the fire.