More Blood in the Housing Market

The fallout continues in the subprime market, both in the number of foreclosures and in the stock market. It is hard to say where this will all end. So far the conventional wisdom is that it will all be contained in the subprime market (I think they are wrong), and that it won't lead to a recession (wrong again). I think the problems are far deeper than anyone is letting on. There has been rampant speculation (and fraud) in the mortgage market. As Warren Buffet once said, "It is only when the tide goes out that you know who has been swimming naked." The tide is going out in the housing market.