Interest rates are rising and the crunch will come.  People will have less available cash as mortgage costs rise and the price of food has risen dramatically too. The reality of the situation is hitting the home market, as European economies are being affected.

The "days of easy credit" are almost certainly over and the implications of this for everyone - from hedge funds to home owners - are only now being realised.

Today, the Federal Reserver has again injected cash in the system. Investors weigh weak earnings with strong economic data on what is turning out to be yet another volatile session.

The real question is :

- Will the Economic Slowdown hit the Consumer Market in the USA ? 

In Europe, shares of banking stocks were hard-hit as equity markets retreated. The worst-hit included BNP Paribas, which last week sparked a market rout when it revealed it had frozen three funds in subprime mortgages had been invested. Shares were down 2.9 percent at midday.

Paris, London, Brussels and Frankfurt markets are down. Asia is no better ! Indeed, Asian stocks tumbled on Thursday, heading for their biggest daily fall since the attacks on the United States in September 2001, as persistent fears about a global credit squeeze sapped investor appetite for risky assets.

The yen jumped to five-month highs as currency carry trades were unwound, while emerging market bonds, stocks and currencies were dumped in favor of safe-haven government bonds amid worries about spreading U.S. subprime mortgage problems.

"The subprime issue will probably take months to play out so trading is going to be very nervous for a while," said Eric Betts, equities strategist at Nomura Australia.