Remember that more than a year ago Subprime Mortgage Bonds forecast a total meltdown in that industry, and that nearly all of the companies in that space would go bankrupt. We were told that this sort of "Armageddon" scenario would not and could not occur, and that the credit market was playing "histrionics". A number of so-called "smart money" investors (Wilbur Ross anyone?) stepped in and bought these supposedly-undervalued instruments - and promptly got slaughtered when the actual performance was worse than the credit markets were forecasting.

The credit market was right and those who said it couldn't happen were wrong.

Now the credit market is saying that we are going to have more defaults than happened during The Great Depression. That is, it is forecasting a Greater Depression that worse than the 1930s. The TNX (10 year yield) is threatening to break three percent, down another 6% (!) this morning to 3.16%. The bottom going back as far as my charts extend is 3.07%. Almost there.

The 13 Week T-Bill (IRX) stands at 0.1%, which is for all intents and purposes zero. The Effective Fed Funds trading rate has been between 0.2 and 0.3% since the last putative rate cut to 1% - that is, effectively zero.

Corporate AAA commercial mortgage spreads are at extreme wides, standing at over 700 bips; added to reference this means that super senior AAA commercial mortgages now yield more than 10%. Given the level of credit enhancement in these deals this forecasts default rates of more than thirty percent in this space. Similar extreme spreads are found among both the "high grade" and "high yield" corporate bond markets.

The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand. That we are headed for unemployment north of 20% on the U6 (broad) measure, and GDP contraction of twenty percent cumulatively from top to bottom.

That's one person in five in the US without a job, deflation of 20% cumulatively or more in prices, over 2 million businesses going bankrupt in the next three years, and literal starvation and privation - all across America. No part of this nation will be spared.

The market callers are all saying all this is impossible.

Even though every thing the credit market has forecast thus far since this problem began has been not only proved correct but conservative; that is, if you bought believing that it would not be as bad as the credit market is forecasting, you have had your head handed to you.

So who are you going to listen to?

Ben Bernanke ("we won't have a recession") and Hank Paulson ("the economy is fundamentally strong"), along with all the market "callers" on CNBC, who have been wrong every single time for more than 18 months?

Or the credit market which has been right 100% of the time thus far since this crisis began?