Geez.  Everyday, a new headline emerges that begins to put things in perspective of how bad the sub-prime mess is impacting financial markets.  The latest headlines, “Freddie Mac plunges as housing crisis rumbles on” and “Leading lender likens US credit crisis to Great Depression” are just a couple this week.

The sad truth however, is that we have yet to see the full impact of the mortgage mess hit the street just yet.  Rumors of massive layoffs at investment banks, massive layoffs at mortgage companies as they implode and the trickle of this poison to other markets: credit cards, auto loans, carry trades, etc will wreck havoc.

Don’t forget that during the Great Depression, it was such a depression because people lost their homes.  If you have no home then you have no point in spending any money on “stuff” because there isn’t any place to put the “stuff” you buy.  What good is an iPod if you don’t have an electrical outlet to charge it up on?   Why would you need a couch if you have no home?  Towels?  Soap? Dishes? Rugs? DVD Players? TVs?  No where to put any of that stuff so why buy it?  Depression feeds on itself as people lose hope.
Survival becomes of tantamount importance and the real problem in my mind is that all of this is happening at a time when we have millions of people getting ready to retire over the next couple of years which will strain already strained systems.

All I can suggest is that you hope for the best but plan for the worst.