The US subprime and credit crisis has cost the world over $7.7 trillion, according to a report released in February by Bank of America.
The worst could yet be to come. Shah Gilani in Money Morning says the $62 trillion market for credit default swaps (CDS) is a ticking bomb.
The derivative instruments – which offer insurance against default – are neither transparent nor regulated. But they are all at risk. And they are already causing huge writedowns in the banking sector…

Former hedge fund manager Shah Gilani says corporate assets can be accounted for in multiple ways, at the discretion of management. And this makes comparative analysis nearly impossible. Shah says understanding these tricks is crucial to finding out the true state of any bank’s finances.

To gauge the depth and duration of this credit crisis you need to understand how banks use accounting methods to shore up their balance sheets. Former hedge fund manager Shah Gilani says banks use a whole host of tricks and sleights of hand to create the illusion that things aren’t as bad as they really are. Shah says this deception will only prolong the crisis on Wall Street…

Given that the U.S. Federal Reserve is the master of “Three-Card Monte,” can you tell what’s in the cards for short-term interest rates?

The fundamentals of economic strife based on the disastrous collapse of the U.S. housing market will not get better any time soon. In fact, what’s being pushed through both houses of Congress, even as you read this, is so dangerous that it should be immediately abandoned and revealed for what it is – a ticking time bomb labeled with the initials FHA.

It’s the end of the “American Dream.” It’s the story of how the inevitable bailout of insolvent housing giants Fannie Mae (FNM) and Freddie Mac (FRE) – with the Federal Housing Administration soon to follow – will ultimately lead to such sorrowful sequels as “The Death of the Dollar,” “The Downgrading of U.S. Government Debt” and, yes, “The Depression.”

Unlike Dorothy in “The Wizard of Oz,” the brutalized U.S. banking system will never again return to that comfortable, cozy, and cushy capital place it once happily referred to as “home.” But its “Wicked Witch” was its own greed. The curtain has finally been pulled back on the machinery, and the hot air used to pump up the U.S. banking system’s version of the Emerald City in the Land of Oz.