A tragedy in three acts

Last year was the most difficult in the markets since 1998, with rising delinquencies in the US subprime mortgage market sparking a crisis of confidence across the credit sector. Peter Madigan looks back at the year and charts how events played out

Although in hindsight the clues were there as far back as 2006 to suggest that last year would be a difficult one for the US mortgage market, even the most pessimistic of observers would have been hard pressed to predict the severity of the turmoil in the financial markets in 2007. Losses from residential mortgage-backed securities (RMBSs) and collateralised debt obligations (CDOs) with exposures to subprime mortgages are approaching $60 billion (based on a count of 14 large banks with losses in