The chairman of Citigroup (NYSE: C), Win Bischoff, said that housing in the U.S. and UK will probably fall for another two years. According to Reuters, "He also said he expected the credit crunch could continue through until 2009.
What was not said is that there can probably be no banking recovery while housing remains in trouble. The value of mortgage-backed paper cannot stabilize. A housing "depression" will make it extremely difficult for GDP to do anything other than move down.
Housing and oil remain the two most critical factors in the ability of the economy to make any comeback. Oil is down some, but unless its stays well below $120, it is hard to imagine that gasoline and petrochemicals will drop to an affordable level.
The value of housing has such a powerful effect on sectors from retail to automotive that Bischoff is essentially saying the the present climate will get much, much worse.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
7-20-2008 @ 8:34AM
william lindblad said...
Suggested reading. The history of Labor Day.
7-20-2008 @ 10:22AM
Enrique said...
Well, of course housing will go down. American greed has caught up with itself. The lowering of interest rates only increased greed by people inflating prices of their homes to sell. Financial institutions contributed by giving out bogus loans. Congress gave our jobs away to other countries because of the interests that they had in their own investments as individuals, forgetting the average American. and, we got involvd in a war that was poorly planned because we "thought" that these people would think like Americans, forgettign that they have a culture of their own. We have now created a "new monarchy" in this country called "the politicians" who only serve their own interests and oil futures investments on both sides of the isle. Not longer are we a republic that is "of the people, by the people, and for the people..." It has already perished from the earth. We ahve a government that is "of the politicians, by the politicians, and for the politicians" and their personal investments. We are only the pawns in this chess game. Now people aren't chasing mortgages. They are chasing the money to pay for gas. They are not focussed on houses. And, if theya re stuck with a large house, they are hit with large heating and AC costs... as it should be. yes, instead of progress, this is all a result of American greed and the release of power of the people to the new monarchy. This only leaves a new surge of the poor, only added to by illgal immigration of more poor, which means more taxes in the downward spiral... while congressmen and women continue to get richer as the royalty. do you think they invest in banks?