The flow of niggling economic news show no sign of slowing despite the bright start to the second quarter on US markets.

And the local bulls should keep in mind that if the market rises too quickly then we could very well find the Reserve Bank sticking interest rates up again in May. The betting is still on the RBA sitting on its hands, but it wants to see a slowing economy and with a flood of money from higher coal and iron ore prices in Asia expected from mid year onwards, it may decide to stick rates up one more time.

It’s a different story in the US and Britain.

Fed chairman Ben Bernanke went as close as he ever has to saying that the US is in recession: “It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” he told the US Congress’s Joint Economic Committee overnight.

And, while he said the Fed expects the economy to return to its long-term growth rate next year, “in light of the recent turbulence in financial markets, the uncertainty attending this forecast is quite high and the risks remain to the downside.”

But leaked drafts of the latest outlook from the International Monetary Fund show it’s forecasting US growth for this year will tumble to 0.5% from its 1.5% estimate in January and comments that there is a 25% chance of a global recession next year.

Bernanke was also quizzed about the Fed bailout of Bear Stearns: he said that the investment bank had told the Fed on the Thursday night that it was prepared to file for bankruptcy the next day, which would have chilled financial markets around the world.

In Britain the Bank of England said mortgage approvals dropped close to their lowest level in nine years in February as the property market continued to sag, while leading banks continued chopping back the number of home lending products they are offering.

The Bank said 73,000 housing loans were made in Febraury, compared to 74,000 in January, and down 40% from the 120,000 mortgages approved in February, 2007.

More worrying was a near $4.3 billion jump in loans and overdrafts for consumers in February, with another $900 million on credit cards. The $5.2 billion plus rise was one of the largest since records started in 1993, according to London-based analysts.

And, First Direct which is the online and telephone banking arm of HSBC has stopped offering new mortgages after applications soared five fold.

The bank says the hold is designed to give it time to clear the backlog of customers wanting its introductory 4.95% two year fixed offering after other lenders cut back on their new loan products or started boosting rates.

In Germany, WestLB AG, the crippled government-owned German bank bleeding from subprime-related investments and other problems, lost far more money than estimated in February. It said yesterday it lost 1.6 billion euros ($2.8 billion) compared to the forecast of 1 billion euros for 2007. It also wrote down assets by 2 billion euros, expects further markdowns in the first quarter and has set up an off balance sheet vehicle to try and stop write-downs on a further 23 billion euros of investments from further damaging the bank.

And in Manhattan, there are signs of the property slump hitting the heart of the business which caused the problems in the first place: Wall Street. Apartment and house sales are slowing in Manhattan, but prices are still rising because of 2007 deals still being settled, but apartments sales slumped 34% in the first quarter. That’s a rate not seen for 18 years, and in Brooklyn prices have started falling.