Yes the connection seems tenuous at first, but its there. Today French bank BNP Paribas froze three of its funds invested in asset-backed securities. If the US sub prime business in the US has hit a bank in Paris, you know this is big. There is more – the European Commission is planning to ask Germany for more details of a government plan to rescue IKB Deutsche Industriebank AG from the fallout of the bank's exposure to the US sub prime market. There is also speculation that German state bank WestLB is facing serious difficulties linked to its exposure to the sub prime market.

We heard a report this morning that the worst case scenario is 7m Americans could lose their homes. By now the link between mortgages and travel should start to become more clear.

The link is sentiment. If a person looks like they may lose their home, travel is going to come to a screeching slowdown. Why? The 7m is but the tip of the iceberg. While that number may be high, the impact of millions of people losing homes will cause a sea change in American sentiment.

America's economy is driven by consumer demand. We Americans live beyond our means, depending on rising home values to fund consumption. When those values evaporate (some of these bank investment funds are now worthless) then the gravy train stops. The sharp stop hurts and consumer demand collapse will impact every sector. Something like travel, which is discretionary spending, will get hammered first and very hard. Business travel will decline also.

Last year we were clearly wrong in thinking the flu epidemic would grow. So we could be wrong again this time. Either way, this is yet another item travel industry watchers need to pay careful attention to.