At this point all the mainstream press and analysts add the terms "meltdown" or "carnage" next to almost any subprime story or analysis. But, as predicted by a few, the subprime carnage/meltdown is now spreading to other parts of the mortgage market and to other components of consumer credit.

See for example the story by Bloomberg below. According to that article the subprime contagion is now seriously spreading to near-prime Alt-A loans that, as discussed before, had the same reckless features as the subprime one. As Bloomberg put it:

The subprime credit crunch is beginning to ensnare even borrowers with good credit.

Lenders are increasingly refusing to lend to homebuyers who can't make a down payment of more than 5 percent, especially if they won't document their income. Until recently such borrowers qualified for so-called Alt A mortgages, which rank between prime and subprime in terms of risk. Last year the category accounted for about 20 percent of the $3 trillion of U.S. mortgages, about the same as subprime loans, according to Credit Suisse Group.

``It's going to be very difficult, if not impossible, to do a no-money-down loan at any credit score,'' said Alex Gemici, president of Parsippany, New Jersey-based mortgage bank Montgomery Mortgage Capital Corp. Companies that buy the loans ``are all saying if they haven't eliminated them yet, they'll eliminate them shortly.''

Tighter lending standards may slash subprime mortgage sales in half this year and Alt A mortgages by a quarter, according to Ivy Zelman, a Credit Suisse analyst in New York who covers homebuilders. The new requirements will force some prospective homebuyers to save more money for a down payment or risk being denied credit.

But the problem is not just subprime and nearprime (Alt-A) that, by themselves, accounted for 40% of originations in 2005-2006. It is also a problem with home equity loans, piggyback loans and also a problem for a significant part of near-prime and "prime" ARMs that are resetting to the tune of $1 trillion alone this year. So, the contagion will soon spread to those parts of the mortgage market too.

More importantly, the contagion will further spread to other components of consumer debt. While everyone is now obsessed with subpime mortgages - while most analysts ignored the problem for almost a year - no one has even started to talk about a much bigger subprime problem: in the last few years in addition to an explosive growth of subprime mortgages we also saw a massive a growth of subprime auto loans and subprime credit cards.

Lets discuss now some of the severe problems with these other components of subprime lending and why we will soon see a subprime credit cards meltdown and a subprime auto loans meltdown.

Here is a seven points take on this emerging meltdown: