America's economy risks the mother of all meltdowns

[katty]

more: http://news.yahoo.com/s/ft/20080219/bs_ft/fto021920081334359078;_ylt=AozoX8V3CwKFRV6c_RfR1f0E1vAI

America's economy risks the mother of all meltdowns 19 Feb 2008
By Martin Wolf
2 hours, 15 minutes ago

"I would tell audiences that we were facing not a bubble but a froth - lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy." Alan Greenspan, The Age of Turbulence.

That used to be Mr Greenspan's view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University's Stern School of Business, founder of RGE monitor.

Recently, Professor Roubini's scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is "a rising probability of a 'catastrophic' financial and economic outcome"**. The characteristics of this scenario are, he argues: "A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe."

Prof Roubini is even fonder of lists than I am. Here are his 12 - yes, 12 - steps to financial disaster.

[ayeshahaqqiqa]

1. Step One-Negative Equity, Loss of Value, Builders Going Under

I've seen a HUGE slowdown in building and selling of homes. For February, we haven't gotten ONE contract on a termite job. This is the worst it has been in the seven years I've worked in the industry. Many times house closings are falling through because banks don't want to lend money. The ones that have gone through last month were either with out of state buyers with ready cash (we're one of the cheapest housing markets in the nation) or people buying repos. And there are a LOT of them now. Our builders are taking a hit, and are hurting, too. This has a ripple effect on the economy--termite companies, building supply houses, etc, are also affected.

[Fed_Up_Grammy]

3. So the builders are taking a hit. Did they share when they were

raking it in?

Cycles !!!!

[defendandprotect]

2. GOP dirty little secret . . . recessions and depressions . . . enjoy it all over again --- !!!

Remember the SURPLUS and PEACE . . . ???