2008 Credit Crisis Update: Trouble Behind, Trouble Ahead

The July 19, 2008 edition of The Wall Street Journal reports that, although Wall Street seemed to be relatively pleased with Citigroup's recent announcement of a $2.5 billion quarterly loss (because it was less of a loss than expected), some forbidding clouds loom on the horizon:

• Credit problems are spreading to a wider array of loans around the world. As a result loan losses are likely to swell for at least another year;
  
  
• Loan problems are cascading from mortgages to credit cards to commercial loans;
  
  
• Bankers are shifting more of their concern from subprime borrowers with blemished credit to solid customers who as a group are increasingly falling behind or defaulting on their loan payments;
  
  
• Rising defaults in credit card loans and prime mortgages will further drain bank profits and capital at a time when many banks are already restraining lending;
  
  
• Citigroup's delinquency rates for prime mortgages and credit card debt are rising;
  
  
• Citigroup reported a rise in defaults on credit card loans worldwide: in Brazil, Mexico, India, and Japan.