Wednesday, October 24, 2007

Subprime Meltdown: The Reckoning

Here's the latest tally from the New York Times:
  1. Sales of existing homes are falling twice as fast as expected;
  2. Merrill Lynch is taking a $3 billion charge on the mortgage backed securities on its books over and above the $5 billion charge that it announed just two weeks ago;
  3. Total losses to investors and financial firms is now estimated at $400 billion;
  4. Total loss in real estate wealth expected to be between $2 and $4 trillion;
  5. The Joint Economic Committee of Congress predicts about two million foreclosures by the end of next year on homes purchased with subprime mortgages;
  6. Housing prices are predicted to decline between 10-20% over the next year and a half;
  7. A 5% drop in prices is expected to result in a $60 billion decline in consumer spending, because of reduced wealth;
  8. Over the next year and a half, interest rates are due to reset higher on two million homes;
  9. Inventories on unsold existing homes has reached the highest level in 20 years;
  10. From 2003 to March 2006, housing-related businesses added 1.3 million jobs, or about 23 percent of all new jobs created in that period. Since March 2006, the housing industry has lost 383,000 jobs and more layoffs are ahead; and
  11. Layoffs in the financial industry are expected to be just as bad.
On the positive side, you can buy one square inch of a Miami condo for only $35.50. So, if you're a mouse with a taste for South Beach, you're in luck.

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