SAR #8291

Let's finish what Roosevelt started.

Same Old Same Old: No, it's not over yet. Economists suggest that house prices will probably fall through 2009, longer in some areas. The recession's impact will stretch far into the future.

Pre-Shrunk: What's left of producing real things in the US - factory output, mines, utilities - nosedived nearly 3% last month. No, not more outsourcing of everything. Simple slowdown, this time. Pretty much it's the little engine that simply can't pull all the computer gazers on Wall Street out of the hole they've dug.

Neighborhood Watch: Pakistan has turned again to China for economic help. The US offered to send more cruise missiles.

That Old Time Religion: Jamie Dimon, CEO of JPMorgan, says that they have reverted to "old fashioned" loans capped at 80% LTV after verification of income and honest appraisals. In California, Nevada, and Florida Morgan is requiring 35% down payments.

Musical Chairs Car Sales: Auto sales for 2008 are projected to drop 16% from 2007, and then to fall another 11% in 2009. Chrysler seems to be the one without a chair.

Lesson The First: Regarding depression, or just a long and deep recession, the first lesson to be learned is that we are not as smart as we though, nor are we as wealthy as we pretended. While peak oil played a role, as did food prices and insecurity, the real crisis is economic: the economic system we have tolerated for the last couple of decades is unfair, unstable and seriously flawed. Yet we're letting the Usual Suspects put the damned thing on life support.

The Next Shoe: S&P estimates foreclosure losses on $280 billion in Alt-A loans at 40%. How is getting the banks to lend yet more money supposed to prepare them for these losses?

Don't Quote Me, But: The NY Times has finally figured out that US house prices must fall another 15% - 20% before this episode is done and stability returns to the real estate markets. This is based (as you've read here repeatedly) on a return to the once-traditional 20% down and 3x earnings standard to get a loan, and price increases that kept step with inflation. Convincing people that a house is a home and not a perpetual ATM machine will be a slow process, insulting to egos and damning to the economy.

Not Tonight, Darling: As the price of oil falls below $70 a barrel, the enthusiasm to 'drill here, drill now' is evaporating. Oil companies have lost both access to the credit needed fund drilling programs and the interest in doing so. It would cost more to lift the oil than they'd get for it at today's prices. You can also buy ethanol plants in Iowa at 2 for 1 auctions.

Fractions: To date the financial sector has admitted losing $637 billion. That is (a) big money at my house, (b) halfway to the IMF's expected $1.4 trillion or (c) one quarter of the way to Roubini's estimate of $3 trillion.

So this is News? A Federal Judge has ruled that the GOP plan to use a list of foreclosed home addresses to challenge voters is illegal. Hasn't stopped 'em before.

Bataan: Over $40 billion was withdrawn from US hedge funds in September . The actual total is much larger because the majority of hedge funds are based in London, not the US, and most funds have a 45 or 90 day delay on redemptions. Those in the hedge fund industry view the period between now and the end of the year as "a death march" as investors scramble to get their money back.

Porn O'Graph: Retail sales, or not.