Some housing bubble reports from Wall Street and Washington. "Centex Corp., the fourth-largest U.S. home builder, on Monday said its net profit fell 31 percent and orders were off 21 percent, prompting the company to slash its forecast in another sign of the eroding U.S. housing market. 'Centex is another confirming data point that the trends directionally are continuing to get worse,' analyst Rick Murray said."

"Centex followed in step with U.S. home builders who have reported falling orders and have slashed their forecasts, bemoaning the flood of unsold homes on the market, especially from speculators dumping their investments that no longer rapidly increase in value."

"Closings fell 11 percent in the once-sizzling Southeast, where new orders tumbled 43 percent. With the order fall-off, Centex walked away from options contracts for land, writing off $36 million of options deposits."

"'Despite the supply driven correction occurring now, the company believes that the fundamentals driving industry demand remain strong,' Centex said on Monday in a statement."

"Orders fell across all markets, with the Southeast (down 43%), Mid-Atlantic (down 23%), and the West Coast (down 21%) seeing particular weakness. On the company's conference call Tuesday, Centex management blamed speculators looking to quickly flip their homes for much of the current inventory accumulation in the U.S. housing market."

"Centex said it is using incentives to increase sales in markets where oversupply is an issue. By also reducing overall land purchases and walking away from land option contracts in overheated markets, particularly California, the company is emphasizing cash generation and a clean balance sheet."

"UBS analysts said Countrywide Financial turned in 'mixed' results, with production earnings below estimates, with lower spread income, lighter margins and higher expenses. UBS noted that management lowered its production range $400 million to $475 billion from $400 billion from $550 billion, 'which reflects the outlook for a more competitive environment.'"

"Countrywide Financial CEO Angelo Mozilo on Tuesday said the largest U.S. mortgage lender wants to cut $500 million of costs in the next year as competition rises and mortgage production volumes are expected to decline. 'We find redundancies and waste in certain areas of the company,' Mozilo said. Mozilo did not specify where the cuts would come from, or how many jobs might be affected."

From the FDIC. "Surging loan volumes and relaxed underwriting point to the possibility of rising losses in the future, according to the Summer 2006 edition of FDIC Outlook released today. 'Despite today's low loss rates, credit risk remains the most important long-term threat to bank earnings,' said FDIC Chief Economist Richard A. Brown. 'Bankers and bank regulators need to remember that rapid expansion in loan volumes often leads, over time, to declining credit quality.'"

"Perhaps the most far-reaching changes have been observed in U.S. mortgage lending, where the use of interest-only mortgages and pay-option mortgages increased dramatically in 2004 and 2005. Use of these products has led to concerns about the risks they may pose to lenders and to homeowners."