http://money.cnn.com/2008/01/23/real_estate/merrill_forecast/index.htm?postversion=2008012317 But for those who think that the worst is over, Merrill Lynch said that housing prices still remain comparatively high. The brokerage believes that home prices are still far above historical norms when compared to other measures such as rent or GDP. "By our calculations, it will take about a 20 to 30 percent decline in home prices to correct this imbalance," said the report. Merrill Lynch believes that housing starts will most likely slide another 30 percent by the end of 2008 – a historic low.
Stop the presses! Man the battle stations!
The mega-firm that wrote off $24.5 BILLION dollars in CDO, SIV and sub-prime related loans is predicting a significant drop in prices and sales. Now that's news! lol. The same part of the Wall Street contingent that said we wouldn't see a recession until it finally hit them between the eyes with a 2×4 is going out on a limb here folks.
They, along with the rest of the "expert" financiers, some who have written off half as much and some even more are finally getting it. We're heading into the heart of a recession with severely limited financing available, a very small group of qualified buyers even at higher jumbo loan rates, facing the largest price drops on record. There will be very few buyers this year and next imo. If Merrill and others are finally predicting a fairly size able drop you can add another 10-15% to that imo. We're dealing with stagflation and inflation ($4 a gallon gas by April) bearing down on us in a hurry.
Politicians like Arnold and Bush are now blaming the media for "all this recession talk". The media? Those conspirators? Say it ain't so Joe. So if the media starts painting us a rosy picture then everything will be okay? What a concept. It's the economy stupid. On top of all this "good" news is this update from Bloomberg talking about a huge disaster pending. Look at the possible carnage of the VIE's (variable interest entities) from these well know banking and security firms like Goldman, Lehman and Citigroup.
Wall Street’s write downs stem from a surge in mortgage delinquencies among homeowners with the riskiest subprime-credit histories. The industry’s VIEs, also known as conduits, had $784 billion in commercial paper outstanding as of last week, according to Moody’s Investors Service and the Federal Reserve.
“There’s a big number at work here and it will have significant consequences,” said J. Paul Forrester, the Chicago- based head of the CDO practice at law firm Mayer Brown. “The great fear is that a combination of subprime CDOs, SIVs and conduits result in a flood of assets into an already-stressed market and there’s a price collapse.”
Now that’s a scary thought!
If the politicians want to blame it on the media to take the heat off themselves, the bankers and the Fed then go ahead. Problem is it's everywhere. Look at the DEFCON post here on Piggington. It's CNN-based with Glenn Beck and the "media" reporting on the possibility of more bad news. Much of what is written has occurred and we're in deep caca if the rest of it comes to fruition.
.
