Ruminating on a housing recession

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Good morning. It’s funny how perceptions shift over time. For quite a while, housing bubble blogs (not this blog, it’s only 4 months old) have been predicting that the housing bubble would pop and cause a recession. Most economists said this was very unlikely -- the economy’s fundamentals were simply too strong, and housing doesn’t drive our economy. Then this summer, as predicted for so long on other blogs, housing weakened dramatically, mortgage defaults set in motion a credit squeeze, and now more and more economists are saying, gee, this could cause a recession.

Items:

--The risk of massive defaults on subprime mortgages and heavy debts now poses a bigger threat to U.S. economic prosperity than terrorism, a panel of U.S. business economists said on Monday.

--The default rate on sub-prime mortgages packaged into securities almost doubled to a record 13.43% in June from a year earlier, according to a report issued Friday.

--Former Treasury Secretary Lawrence Summers says in this article the risk of recession is greater now than at any time since 9/11.

--Time.com declares that ‘ground zero’ in the real estate bust is ... Where do you think it is? The Inland Empire? The Central Valley? Miami? Phoenix? Las Vegas? San Diego? L.A.? Sacramento? Coastal Florida? Cleveland? Detroit? Wrong on all guesses. Time.com says it’s ... Denver. What’s our point? This crisis is a big local story in a lot of places.

Comments? Thoughts? Insights?
Hat tip: Patrick.net