On the off chance you've been lulled by the soothing media stories quoting this expert and that analyst stating that the worst is over for the global economic crisis slowly unfolding, there are plenty of second opinions to suggest that we're about half way there.

First, the increasing rate of default on Alternative A, or Alt-A mortgages, is a clear indication that there is another tier of mortgage debt on the verge of implosion. The potential for a further $100 billion in Alt-A loan losses is one of the key drivers prolonging the continued misery of the U.S. housing market. The rate of default on these loans has multiplied by a factor of 4 since April of last year to twelve per cent.

But even more worrying is the increase in defaults among prime loans, which has doubled to almost 3 per cent for the same period. There is $12 Trillion tied up in prime loans.

With these assets continuing a downward trend in valuation due to absence of demand, the pressure on Fannie Mae and Freddie Mac intensifies, as they are the two government sponsored agencies that guarantee most of these loans.

Both of these entities have been effectively nationalized despite the rhetoric coming from treasury secretary Hank Paulson's office. The United States Treasury Bill has effectively become a share in one or both of the mortgage agencies.

James Dimon, the chairman and chief executive of JPMorgan Chase, said that he expected losses on prime at his bank to triple in the coming months and described the outlook for them as "terrible."

The reality is that prime and alt-A loans have longer introductory periods of special interest rates, therefore, it makes sense that over the next six to 18 months we should see an increase in the amount of prime credit borrowers defaulting on their mortgages -- the Housing Bill will do little if anything to prevent this from occurring.

What does this imply for investors in the resource sector who have seen many well-managed companies become paralyzed due to an inability to raise additional capital from investment banks?

As banks come under increasing pressure to limit losses, the furious pace of de-leveraging means that massive amounts of capital that previously existed are evaporating into thin air. There's just no more "risk" money out there - at least not for exploration.

Many junior companies will simply cease to exist in the coming months as they first lose the ability to service their project option obligations, and finally just close the doors when they can't even afford the filing fees to keep their public listing in good order or pay any of their staff.

While this will see a prime opportunity for well-funded companies to beef up their project portfolios through acquisition, managers will be leery about putting more projects in the pipeline that are going to require development capital.

The temptation for investors too is to stick their necks out to buy shares in deals that now appear ridiculously undervalued, but in this market, that is one sure way to compound misery with woe.