More pain ahead?
Today was a dismal day of economic events. Fed chairman for the first time admitted "numerous difficulties" ahead for the economic. This was a completely different tone from the last year, when the sub prime mortgage crisis was understood to be "contained". Economic and housing market was expected to pick up in the second half of 2008. My prediction is continued outpour of the bad news on most economic front. Fed reserve has used up most (if not all) the silver bullets in recuing Bear Stern and Fredie Mac and Fannie Mae. The free fall in house prices continues, and with that the precarious capitalization of several banks. We are in a downward spiral where one bad news fuels more bad news - opposite of the upward spiral in housing we enjoyed from 1997 through 2007. With unemployment rising and prices rising, home buyers are in no mood to open their purses to buy homes, where the likelihood of buying the house cheaper down the road is very high.