If misery loves company, American consumers are certainly not alone.
Evidence is increasing that Wall Street’s credit turmoil is spreading abroad. It seems few countries are being spared.
Swiss banking giant UBS, for example, has been hit hard with mortgage and credit losses of $37 billion. It could cut up to 10 percent of jobs across its investment banking and trading division.
The cuts could potentially affect 2,200 UBS employees worldwide.
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Meanwhile, London’s stock market is bracing for as many as 40,000 payroll cuts.
"Financial services are at the center of this recession,” John Challenger, CEO of Challenger, Gray & Christmas, told the New York Post.
"This crisis is deeper than the one in the early 1990s, and we still don’t know how far we’re into this one.”
The housing bust, too, is now spreading globally.
In countries like Ireland, Spain and Britain, housing markets are cratering fast.
Home prices in the U.K. rose by 215 percent in the 10 years to 2007, according to The Economist. The International Monetary Fund now figures homes there are nearly 30 percent higher than can be explained by rational factors like demand and economic growth.
According to the magazine’s index of home values, Ireland is in even worse shape, and the Netherlands, France, Norway and Denmark are all at least 20 percent too high or more.
Some property analysts have even predicted that some countries are facing the possibility that the downturn could become a wholesale collapse.
"The problems in the U.S. are being transmitted to Europe,” Michael Ball, professor of urban and property economics at the University of Reading in Britain told The New York Times.
"What’s happening now is an awful lot more grief than we expected.”
According to the newspaper, reverberations of the U.S. subprime crisis began showing up in Britain’s housing market last summer — mortgage approvals dropped 31 percent compared to the previous year.
By last month, average housing prices had fallen 2.5 percent, the largest monthly decline since 1992.
"The U.K. followed the U.S. into never-never land, pushing mortgages out the door, believing that prices would go up forever,” Allan Saunderson, managing editor of Property Finance Europe, said.
There may be some relief in sight, though.
Pressure is growing on the British government and the Bank of England to take more initiative to revolve the mortgage debt crisis. British authorities are working on a plan that would loosen the lending squeeze gripping the home loan market there.
The new plan would allow banks to temporarily swap mortgage-backed securities for government bonds to help free up their balance sheets and allow them to lend to more consumers.
Banks have warned that lending could decrease by as much as 50 percent this year, Reuters reported.
The decline in home values is also spreading to the once-hot housing markets in Eastern Europe and the Baltic states. Western Europeans have stopped buying investment properties in cities such as Warsaw, Poland and Tallinn, Estonia.
Even India is suffering from a decline in property values. In New Delhi and other parts of northern India, prices have fallen 20 percent over the last year.
Closer to home, Washington Mutual reported a first-quarter loss of $1.14 billion. It also confirmed it closed a previously announced deal to raise $7 billion from a group of investors led by private equity firm TPG.
"Nothing of this scale has happened since the Great Depression. This is the toughest credit cycle I have seen in my years in the industry,” said WaMu Chief Executive Kerry Killinger.
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