US recession

Now we have clarity. Last week's awful employment data from the US ended all arguments about whether the US is heading for a recession: it is already in one. Now we need only argue about its severity and its duration.

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On Monday, Wall Street threw in the towel. The morning's worst fallers are a list of the groups that dominated the world of securitised finance over the last two decades: the mortgage agencies Fannie Mae and Freddie Mac, the bond insurers Ambac and MBIA, and the investment banks most deeply involved in mortgage finance. As with the economy, we have clarity: the credit market model is broken and must be fixed.