Even through the normally rose-coloured glasses of Standard and Poors, the housing market looks screwed. In S&P’s most recent commentary, the financial services giant suggested that house prices could fall by 20% from their 2006 peak. The verdict on the labour market wasn’t much more promising:
When we resolved the CreditWatch status of several mortgage insurer ratings on Nov. 21, 2007, we stated that if unemployment rose above 6%, incurred losses for all mortgage insurers would be significantly higher than our expectations. Our most recent macroeconomic forecast shows unemployment reaching 5.8% in 2009, and there is considerable uncertainty in the job markets.
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