Japan’s Economy Grows; Home Builder Confidence Up; New York Manufacturing Rises; Credit Card Defaults Stabilize in July; MSNBC Buys “Hyperlocal” News Aggregator; Reader’s Digest Files for Bankruptcy; Lowe’s Profit Falls 19%

Sky-high default rates om mortgages are not confined to subprime-related borrowing, and the US economy has yet to feel the full force of the housing crisis, according to a report in the The Wall Street Journal.

According to the WSJ, there is a “rapid rise” in default rates on ARM mortgages,  mortgages that give borrowers with good credit several different monthly-payment options, reports. And a report by Citigroup says losses on ARMs may be “close to subprime” in some cases.

The ongoing credit crisis could trigger losses of $1 trillion, according to an assessment by the International Monetary Fund.

In its twice-yearly review of the global financial markets, the UN agency also warned that there is a “collective failure” to grasp the extent of leverage in the financial system that could further damage the health of the US economy.