The following line jumps out of a gloomy Bloomberg News story warning of renewed tightness in credit markets.
Losses and writedowns on securities related to home loans to people with poor credit now exceed $504 billion at financial institutions.
Half a trillion dollars!
A corollary: The National Association of Realtors reported on Monday a modest month-to-month uptick in sales of existing homes, but prices fell again, and the inventory of unsold homes rose to 4.67 million, the equivalent of 11.2 months of supply. The huge inventory implies that prices will continue to decline.
Calculated Risk points out that even the slightly encouraging sales growth figures are suspect: A significant fraction -- as many as 33 percent -- of those sales are "foreclosure resales" -- banks getting rid of foreclosed homes at bargain prices.
When a major prop holding up the residential real estate market is sales of foreclosed-upon homes, it's hard to find much to cheer about. Felix Salmon tells us that only fools attempt to connect daily stock market swings to news attempts, but that's not going to stop How the World Works. The Dow Jones industrial average: down over 200 points at midday. My guess is that everyone on Wall Street read the same Bloomberg story, then scanned the new figures on unsold-home inventory, and decided today might be a good day to sell.