So far, so good? We haven't hit bottom yet

Talking unofficially, Bank of England people think it could be $180 billion. RBS Greenwich Capital, in a study published earlier this month, put the potential losses at about $240 billion.

Clearly they cannot all be right, but that is not the point. What does matter in gauging the current and future level of pressure on the financial system is where we are in the process.

The worrying thing to note is that - even after the losses admitted at Merrill Lynch, Morgan Stanley, Citigroup and the others - total write-offs to date are "only" about $40 billion. So if you think it is bad now, remember that we are barely a quarter of the way through the process.

Banks do have lots of money, but not as much as one might think. In a commentary published this week, Bedlam Asset Management pointed out that the total Tier One capital of the banks of Europe and North America amounts to about $2 trillion. So if the RBS Greenwich estimate is accurate, 14% of the banks' capital will be wiped out.

That alone might cause banks to pull in their horns, but there are two reasons it may in fact be conservative. First, even more of the subprime debt could go sour. Second, the problem could extend to other asset-backed securities.

It seems obvious that this crisis has a very long way to run, and that the first half of next year is likely to be punctuated at regular intervals by banks 'fessing up to yet more horrendous losses - all blamed not on their own stupidity and greed but on the "unprecedented" conditions in the markets.

There are, therefore, two big questions going forward. The first is whether the financial system in this country will get through the storm without another high-profile disaster like that at Northern Rock. The second is just how much of the pain in the financial sector will be transferred to the wider economy.

No one knows the answer to the first, but history does not encourage complacency. All manner of financial institutions - including, let us not forget, the investment banks - rely hugely, to support their activities, on short-term money renewed at regular intervals.

What is more, they do not have recourse to central bank funds in times of strain. So an erosion of confidence can have devastating effects on their ability to refresh this funding and hence, in effect, to stay in business. It is not beyond the bounds of possibility that the next one to go - if there is a next one - will be a lot more important than Northern Rock.

Nor should we assume that it will necessarily be a bank. Swiss Re, the world's largest reinsurance company, announced this week that is has lost £525 million on two credit default swaps. In more normal times, that would have shocked the world to the core rather than being met as now with the shrug that it was "only half a billion".

There are, however, trillions of dollars of credit-default swaps in the portfolios of the world's investment groups. They took this paper because - like Lloyd's Names 20 years ago - they thought that pledging their assets as security to back the underwriting of insurance (which is all a credit-default swap is) was an easy way to spice up their income. As indeed it is until the claims come in.

The Names were for the most part wiped out, and history rhymes even if it does not always repeat itself. There remains, too, the unresolved issue of money-market funds - one of the most popular investment vehicles in the Western world.

These are stuffed full of structured products - many of them based on subprime mortgages. But in most cases, their sponsoring organisations have preferred to take the course of pumping in a bit of their own money rather than that of admitting publicly they have a potential problem, and of suffering the reputational damage such an admission would bring.

They have been doing this in the belief that we are going through a short-term dislocation that will soon correct itself. But they cannot go on propping up these funds forever. If conditions do not normalise soon, they may have some unpleasant news for their investors.

Given the scale of problems out there, it seems impossible to imagine that all this will not have an impact on the wider economy, hitting companies and consumers alike and causing a major slowdown in growth. Yet most analysts, both here and in America, are continuing to forecast double-digit growth in corporate profits for next year and to use that as an argument that shares are cheap.

It is, however, becoming increasingly difficult to see where that level of profit growth is going to come from.