Housing, US Dollar, Gold, PPI and Inflation
The current downturn in Housing, the worst since the Great Depression has along way to run, with home prices likely to experience downside pressure well into 2009.
Overall, a 30% to 40% price decline in high end homes is needed to bring prices back into line with incomes and clear the market. At the same time, the mortgage loan problem, goes far beyond Sub-Prime and will likely end up running into the Trillions of dollars, with the best estimates between2 to 3 Trillion dollars of defaulting bad paper. That’s more than enough downside risk in the credit market to bring the US Financial System to the tip of a very deep solvency crisis, where several large institutions will probably fold.
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