Blog on the Run: Reloaded

Friday, June 25, 2010 8:40 pm

Are we having fun yet?, cont.

Filed under: We're so screwed — Lex @ 8:40 pm
Tags: , ,

May existing-home sales, expected to be up 6% YOY, actually were down 2.2%.

Six months ago almost to the day, Reggie Middleton posed a haunting question:

So, what does it mean if we get another significant [housing] downturn? Well, not only are the 2003 to 2007 vintage mortgages in trouble, but those 2008 and 2009 mortgages are at risk as well. What are the chances of this happening? Fairly significant. For all of those guys who swear we are on the brink of a booming economic recovery, recall that it was housing depreciation that set all of this off to begin with. It was not a dip in GDP, not unemployment, not a dip in corporate profits, definitely not a change in analyst’s earnings forecasts and not a crash in the stock market. It was a crash in housing. What happens if we get another housing crash (or more accurately put, the continuing of the current one) after a few hundred billion of stimulus and a 62% run in the S&P to guarantee that the stocks are nice and ripe in their overvaluations?

We’re about to find out.

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