It’s like the scene in the old TV series Fantasy Island where Mr Roarke and Tattoo were waiting for that week’s crop of visitors to arrive and Tattoo shouts “The Plane … The Plane”. Just when Wall Street and the financial markets started believing (once again) that the worst is over, along comes the equivalent of Mr Tattoo to shout “The banks … The house prices … The banks”. It’s an ugly reminder of the reality of the credit crunch. It’s here and it’s continuing to worsen.

So as the galloping herd had forgot about how the present economic mess began, along comes JP Morgan Chase and UBS (who helped give us the whole, terrible mess in the first place) to remind us that it’s the US housing depression and the credit crunch it caused that remains the main game, not commodity prices, economic growth (or the lack of it) or the newly resurgent US dollar.

Yes, the US dollar has been rising strongly as investors abandon Europe, Japan, Australia, the US, New Zealand and Asia for the supposedly safer growth haven of the US (the US economy won’t slip as much as elsewhere is the supposed attraction).

But the speed of the adjustment in values has a strong whiff of bubble about it: just as commodity prices ran up strongly on the back of a couple of supply problems in oil, grains and some metals, so the US dollar is being chased higher by a bunch of investors looking for performance. And just as all other bubbles in recent years have been pricked, so too will the US dollar’s surge end in red ink for some.

JPMorgan Chase shares slumped by the biggest margin in six years after it delivered a nasty reminder to investors about the continuing impact of the subprime crisis and credit crunch.

The giant bank said it would write-down the value of mortgage-backed assets by at least $US1.5 billion this quarter after credit-market turmoil and the US housing slump deepened. The bank said trading conditions “have substantially deteriorated” since July and “sharply widened” spreads on mortgage-backed securities and loans caused losses.

And UBS, Switzerland’s largest bank, reported a fourth straight quarterly loss on $US6 billion in write-downs and the cost of settling a US investigation into the sale of securities to US investors. The write-downs and other costs gave UBS its fourth straight quarterly loss.

Bloomberg says the two announcements had the unhappy consequence of boosting bank losses from the subprime crisis and ensuing credit crunch over the $US500 billion mark by its calculations, but the the warning by JPMorgan was the nastier of the two announcements (after all, it was just another loss from UBS). JPMorgan is supposed to be one of the best managed banks on Wall Street: it was the one the Fed turned to to rescue Bear Stearns in the bad days of mid-March.

The Financial Times reported yesterday that a majority of 146 international financial institutions surveyed by US firm, Greenwich Associates, believe that another major financial group will get into trouble and fail over the next six months. That’s gloom and doom stuff. The crunch ain’t over, so watch the US dollar.