JP Morgan, America’s third biggest bank, has been hit again by the subprime crisis.

This time the hit is more than $4.6 billion (£2.6bn), taking its credit crunch losses to around $15 billion since August — an unparalleled rate of attrition.

Meanwhile, the bank’s profits tumbled by 51pc to $2.5 billion in Q1, eased slightly by a winning bet on the flotation of card giant, Visa.

Since the Fed is backing JP’s rescue of Bear with $30 billion, this will send a shudder down the spine of Ben Bernanke, the Federal Reserve’s Chairman.

Signs that the crunch is biting even deeper are coming across the board. House building in the U.S. is now at its lowest level for 17 years. JP Morgan suffered a 20pc reversal in its credit card division, while its retail banking arm slipped by over a billion dollars.

JP’s chief, Jamie Dimon, said, “The Economic environment will continue to be weak and the capital markets will remain under stress.”

With Britain beginning to feel the strain, along with some European economies, it’s now clear that the worst is still to come.

A version of this article has appeared in Moneyizor — Money, The Big Picture

Syntagma Media is now relaunching Moneyizor.com as a tracker of the hottest topic of the moment in U.S financial circles : macroeconomics. Think “credit crunch”, “global financial meltdown”, “economy falling off a cliff”, “new Great Depression”, and your adrenalin may just kick in.

The financial news from Wall Street and Main Street has been so alarming since last summer, Moneyizor has been changed from a magazine-type portal to become a vehicle for this crucial topic.

“On the day when the UK’s biggest mortgage lender, the Halifax, reported a staggering 2.5pc drop in house prices in March alone, the IMF warns governments, central banks and regulators that they now face a test of their mettle unique in modern times.”

Make sure you keep up to date on Credit Crunch technicalities with Moneyizor.

Legendary investor, Warren Buffett — the Sage of Omaha — in a move he says is designed to make money, has offered to take on $800 billion of the liabilities of U.S. municipal bonds.

The offer goes to three “monoline” bond insurers, Ambac Financial, MBIA and Financial Guaranty Insurance. One has already rejected the deal, and he is still awaiting reponses from the other two, although one of them is making favourable noises.

The move breathed new life into global stock markets yesterday. The monolines are seen as the second line of defence against the sub-prime mortgage fiasco by propping up banks’ balance sheets in the event of a repayment meltdown.

Traditionally, the bond insurers concentrate on municipal risk, but they too got caught up in the collective madness of sub-prime lending for the same reason respectable banks did : greed for perceived easy money.

However, the monolines are now short of capital and are being hit by downgrades from the rating agencies.

T J Marta, fixed income strategist at RBC Capital Markets, said it was a coup for bond insurers, which could help them avoid “the doomsday scenario”.

The US has entered its first major economic recession for 16 years, according to investment bank Merrill Lynch.

Merrill is the first of the big banks to declare that a recession in the world’s biggest economy is already underway. David Rosenberg, the bank’s chief North American economist, claims that the weakening employment scene and declining retail sales show that the economy has tipped into its first month of recession. [A recession is defined as two successive months of negative growth].

Rosenberg says,”According to our analysis, this isn’t even a forecast any more but is a present day reality”.

For an analysis of the coming recession on both sides of the Atlantic see John Evans’s article in Syntagma.

He writes, “All banks are now hoarding cash like Ebeneezer Scrooge on a bad day and virtually ceasing to lend. With house price indices slithering down a slope like novice ice skaters, and inter-bank rates running at around 8 percent, this has become a total banking crisis worldwide, and that has the potential for real evil in our economies.”

Read the article here.