How deep will crisis descend?

We're starting to hear from the old-timers that this is worst credit environment since the Great Depression. The latest to weigh in is Chip Mason, chief executive and founder Legg Mason. He says the government should put $20 million in to the planned SIV bailout fund-- a sign that the depth of these problems are not lost on it. The problems unfortunately do not appear to be abating. In fact, they may spread. Another troubling sign: prime mortgages. The New York Times notes that E*Trade sold to Citadel at a shocking haircut including a substantial amount of prime mortgages. Does this imply a coming crash in even high qualiTy mortagages? Well, another interpretation is that Citadel negotiated a sweet deal.  

For more:
- here's a Financial Times article article on Mason and others 
- here's the New York Times item

Related articles:
- Other credit problems mounting?
- Credit crisis to worsen