Last week, Passport predicted that a number of financial messes caused by the fallout in the subprime and adjustable rate mortgage market were likely to continue for the next few years, and had the potential to stall worldwide growth. A report in the Orange County Register underscores this claim. Check out this chart:

What this graphic illustrates is that the number of people who will face higher payment due to rate on home loans adjusting higher is not going to peak until spring of next year. This means that more and more people are going to have monthly housing payments increase, which will lead to more foreclosures next summer. This is potentially very bad news for the U.S. economy.

It is not yet clear, though, how a sustained mortgage meltdown would impact the rest of the world. All indications are that Europe, which has its own inflated housing markets, is preparing for the worst. The Bank of England originally said it would not bail out banks that made bad bets on risky products. But after the run on Northern Rock last week, it embarrassingly reversed itself Wednesday, and England's top central banker is under fire in the British press.

Also on Wednesday, German Economic Minister Michael Glos said a weak U.S. economy would drive the value of the euro higher, making it more difficult for eurozone nations to export goods. This is potentially devastating for Germany, a country heavily dependent on trade revenues. (The euro hit a record high against the dollar today.)

The big winner in this mess? Probably China. Because it has a lower debt-to-revenue ratio than other industrialized nations, it can borrow money cheaply to sustain growth through a slowdown. 

So as growth in European and American economies slow, China could expand. This is bad news for those who think China already wields too much economic power.