A deeper hole

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The New York Times has a good ‘trend’ piece about housing tonight, pointing out that the situation continues to deteriorate in front of us. Two examples: ‘Merrill Lynch said yesterday that it would take a charge for mortgage-related securities on its books that is $3 billion more than the $5 billion it expected just two weeks ago. And a report from the National Association of Realtors showed that sales of existing homes in September fell twice as much as economists had expected, to their lowest level in nearly 10 years.’

The Times goes on to theorize that $2 trillion or more of wealth destroyed in a housing slump will likely have a greater economic impact than the same amount of wealth destroyed in a stock market decline -- because more people are exposed to housing. (The idea that half of Americans own stock is misleading; a small number of Americans own a huge percentage of the stock market. Housing wealth is much more evenly, and widely, distributed).

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Hat tip: Amir