The Bush administration's top economic adviser has finally told us something the world knew long ago: part of the US are already in deep recession. Nice to have a government that's in touch with what people are now going through!

The biggest slump ever was recorded last week in the Reuters/University of Michigan consumer sentiment index, reported here, showed that the mood of consumers has slumped to its lowest level since the 1970s and Friday's September housing starts data shows that overall starts fell to their worst level in 17 years.

Meanwhile, the Financial Times reports warnings from experts that the US is facing its worst recession since 1982. Alan Blinder, a professor at Princeton and former Fed vice-chairman has told the FT: "The game is now about making sure this recession is less deep and less long than the 1982 recession."

The big worry in all this is whether we are looking at a tsunami of corporate defaults. And if that happens, the banks face another wave of losses.