There are emerging signs that after ten years of a goldilocks global economy – neither too hot nor cold but just right – the bears, just like in the fairytale, are returning home.

In fact it was the aptly named Bear Sterns, the grey haired grandmother of the Wall Street beauty parade, announcing in the middle of last week two of its mortgage funds, previously valued at US$1.5 billion were to all and intents and purposes worthless.

The funds had, like a number of American investment banks, gambled heavily on the US sub-prime home loan market.

By gambling they did not just lend to people who may or may not pay them back on properties that may or may not increase in value, but by using a sophisticated set of tools to increase their exposure by leveraging themselves into the market.

In the US, the sub-prime home loan market lends money to people who are looking to borrow money for a property but have what is loosely termed an impaired credit history.

In reality the American banks, in the spectre of a buoyant economy, have been falling over themselves to make what the lenders in the US call ‘Ninja’ loans…Ninja – No Income, No Job, No Assets.

The point to all this is that in the US some economists are starting to voice concerns that a few more Bear Sterns-type admissions might be enough to turn market sentiment and stop the longest bull run in equity market history dead in its tracks.

In fact the figures are starting to show the US economy is highly sensitive to housing debt and some of the numbers being reported out of the US are becoming outright scary.

The key reason this is an issue is that between 14% and 16% of the US sub-prime market, depending on whose figures you believe, is held by foreign investors – so if the US sneezes there is a real chance the world will catch a cold.

And it has the potential to be quite a cold, according to Moody’s, which it must be said isn’t arguing that an economic shock of any significance is likely, but states baldly that about 25% of US mortgage debt (approximately US$25 trillion) was outstanding as at February 1 this year.

Of that, about US$1.4 trillion was likely to default and about US$458 billion would almost certainly default, the credit ratings agency noted.

The bank’s desire to lend has made home loan defaults more common, according to the Centre for Responsible Lending in the US.

In the past three years more than four million Americans have defaulted on their home loans and they are expecting another three million defaults before the end of 2008.

Worrying signs for heavily geared lenders.