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.

Citigroup (C) chairman: Housing down for two more years originally appeared on BloggingStocks on Sun, 20 Jul 2008 06:16:00 EST. Please see our terms for use of feeds.