Real unemployment in CA is probably around 10% and rising. Alt A, Prime and jumbo prime are lining up to be a foreclosure storm. Upside down walk-aways are ramping up.These are loans that probably concentrate inthe upper tier areas. What a combo! There’s a good chance that congress will try to intervene. But the speed and effectiveness will be critical.
As other countries around the world see what we’re doing and begin to experience their own recessions, there’s a good chance they will start to pull away from our debt markets and holding their US$. There’s lots of evidence of this happening right now.
What happens when the the US goes to float more Treasuries and there’s no takers? Raise the rate? There may be very strong mechanisms that wont allow a rescue for homeowners. But if a plan is put in place, it could have such devistation on the value of the US$ as to be the same as a major housing price reduction anyway.
