American Traditions, Part 2

Part 1 is here.

Tom posts on subprime credit and links to this interview with a leading Swiss banker.

Switzerland's top banker has warned of massive losses from the unfolding credit crisis, describing the collapse in US lending standards as "unbelievable".

Jean-Pierre Roth, president of the Swiss National Bank, said market turmoil was far from over as tremors from the sub-prime debacle continued to rock the world.

"We're certainly not at the end of the story. There are question marks surrounding the development of the American economy," he said. "Something unbelievable happened. People who had neither income nor capital got credit with very attractive conditions. Now reality is striking back," he said.

You know what this reminds me of? Remember that famous scene in Caddyshack when this brown object is spotted floating in the pool and there's this slow-motion replay of everybody fleeing from it, set to the music of Jaws? In Caddyshack the object turns out to be just a chocolate bar. Well, I picture the European markets at this point fleeing in horror from the pool. Except this time it's a real turd and the U.S. securities industry laid it.

Speaking of turds, you really must not miss this story in Rolling Stone about defense contractors in Iraq.