What is happening today? Jumbo loans in US going bad

Bloomberg just reported today that there is increasing delinquency in the jumbo loans - typically more than 500k USD. So the rich is getting into trouble after almost 18 months subprime crisis started.

The other shoes to drop more are:-

• jumbo, alt-A loans etc. All forms of residential mortgages
• commercial real estate and malls etc
• corporate loans esp the weaker ones - like GM
• Bonds defaults !
  
• credit cards and other forms of consumer loans
• car loans
• and all other loans

These crisis is now no longer financial. It is real and unemployment will be above 10%.

Will this be a great depression? Well if it starts with deflation, and the crisis prolongs or Obama team mishandle - then yes depression will come.

So far I don't like the stimulus packages:-
- only about 300b out of 800b of the plan will be felt in 2009. The rest will kick in from 2010 onwards. All infra contracts must be up for competitive bids. It will be a slow process. Thus higher possibility that economy will turnaround in 2010.
- not enough details in the plans ! What is the stress test?? Can they not just come out and announce that banks will not be nationalised?? what so difficult about that?

I used to put Bank of America and Citi on my buy list. But now I am avoiding all US banking stocks. The only bank I may want to touch is UBS which is down to USD10 from USD60. But it will go down somemore with US IRS going after them, and further correction to come. Basically the salaries of these highly paid bankers will have to come down ! They don't deserve those pay checks. Once that happens, the banks will recover more of the revenue.

Stoneman