There are a number of serious problems facing the mortgage and money markets, according to a leading economist.
David Rosenberg, economist at Merrill Lynch, made the comment to the Financial Times following yesterday's drop in the US and European equity markets.
According to the FT, the fall was prompted by the news that three leading US banks - Citigroup, JPMorgan and Bank of America - are to join forces to buy mortgage-linked securities.
Mr Rosenberg said the news is a sign that there remain "significant liquidity problems plaguing many segments of the mortgage and money market".
"And to think the equity markets believed all was back to normal in the credit market world," he added.
Bloomberg reported today that JPMorgan and Bank of America may be about to record their first profit slides since 2005.
Bad loans and writedowns totalling in excess of £1.5 million are said to have hit third-quarter profits.
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