Some housing bubble news from Wall Street and Washigton. MarketWatch, "The outlook for U.S. home building is the worst in 16 years, the National Association of Home Builders reported Monday. The builders' housing market index fell by two points to 28 in June, the lowest since February 1991."

"The market probably won't turn around until next year, said David Seiders, chief economist for the builders. 'We expect housing to exert a drag on economic growth during the balance of 2007.'"

"The index has fallen 11 points from 39 in February to 28 in June. The index was at 42 a year ago and peaked at 72 two years ago. All three components of the housing index fell in June. The index for single-family home sales dropped from 31 to 29, also the lowest since 1991. The index for expected sales fell by two points to 39, the lowest since September. The index for buyers' traffic dropped by one point to 21, the lowest since January 1991."

"'Builders continue to report serious impacts of tighter lending standards on current home sales as well as cancellations, and they continue to trim prices and offer a variety of nonprice incentives to work down sizeable inventory positions,' said NAHB President Brian Catalde."

From Reuters. "Merrill Lynch & Co. Inc. plans to delay selling off some $400 million of assets seized from a hedge fund managed by Bear Stearns, CNBC said on Monday."

The Street.com. "Late last Friday, Merrill seized $400 million in collateral a day after Bear Stearns successfully shopped nearly $4 billion in securities tied to Alt-A and subprime mortgage loans."

"Bear sold the loans in order to meet calls from lenders to cover the fund's short-interest investments, where the vehicle had made bets that certain securities or indices would decline in value."

From Briefing.com. "Today's Wall Street Journal has an article on the subprime woes that calls specific attention to a Moody's downgrade on Friday of 131 bonds backed by pools of subprime loans."

"The downgrade keeps the subprime issues front-and-center, as does the related report in the article about the troubles being experienced by one of Bear Stearns' in-house hedge funds which is working feverishly to raise new capital to avoid liquidation, according to the paper's source."

The Associated Press. "Moody's said it also put 237 securities on review for further downgrades, including 111 of those already downgraded Friday. The downgrades affects both investment-grade and below-investment grade debt, including securities that had been rated 'Aa', 'Aaa' or 'A' and below, Moody's said."

"A sour housing market, combined with rising interest rates, makes it tough for buyers with little or no equity in their homes to refinance into a mortgage with a lower payment."

"Moody's and fellow ratings agency Standard & Poor's have been criticized for not properly evaluating the risks of investments tied to residential mortgages, but the agencies have defended their track record."

From Moodys. "Most of the securities affected had prior ratings of A and below. However, a small portion of the securities had ratings of Aa or Aaa."

"Second lien subprime mortgage loans securitized in 2006 are defaulting at a rate materially higher than original expectations. Those loans were originated in an environment of aggressive underwriting and lack protection from home owner equity."

"The combination of this risk layering with slowing home price appreciation has caused significant loan performance deterioration and is the primary factor in these rating actions."

"The benchmark ABX credit default swaps index, a measure of subprime mortgage performance, sagged to record lows on Friday on data showing rising delinquencies on risky loans and fears that the recent sharp spike in yields could cause more subprime problems, traders said."

From Bloomberg. "OceanFirst Financial Corp., the Toms River-based banking company that shut its subprime mortgage unit last month, may repurchase $14.6 million of loans sold to investors."

"The bank said it has negotiated 'numerous' cash settlements for claims tied to mortgages, even though the sales didn't include a promise to buy them back if the loans soured, according to a regulatory filing by the bank."

"London house prices rose at the slowest pace in five months in June as the cost of a home fell in more than half of the U.K. capital's boroughs, Rightmove Plc said."

"Values fell in 17 of the city's 32 districts, the U.K.'s biggest real-estate Web site said in a statement today. 'London is falling behind the rest of the country,' said Miles Shipside, Rightmove's commercial director. 'We can expect a drop in house prices over the next few months.'"

"'It is significant because the end of a boom, or the mini- surge that we've seen since prices they slowed down in 2004, is often signaled by London slowing down,' said Rightmove's Shipside."

From Forbes. "The world is awash in cash. Global liquidity is a phenomenal force. Some economists like the Conference Board's Gail Fosler call it 'the garden of Eden.'"

"IMF economist Gary Schinasi told me in Washington some time ago that 'there could be a tsunami of credit evolving into a perfect storm. If counterparty relationships between banks and hedge funds start unraveling that could prevent financial institutions from rolling over their positions.'"

"As Fosler, The Conference Board's chief economist told me: 'This is a bubble, which could be as large or larger as the financial crisis we saw in the late 1990s.'"

"A private report on June 18 may show the National Association of Home Builders/Wells Fargo index of homebuilder sentiment held at 30 for a second month, economists predicted. The gauge hasn't been lower since February 1991."

"'Housing is still trying to find its low point,' said Lynn Reaser, chief economist at the Investment Strategies Group of Bank of America Corp. in Boston. 'Builders have a lot of inventory, and prices probably need to fall further. Housing will remain a drag on the economy as the bottoming-out is likely to take a number of months.'"

"Defaults by subprime borrowers, those with a poor or patchy credit history, are adding to the risk that more homes may be returned to the market, economists said. 'The housing market is teetering on the margin,' Richard DeKaser, chief economist at National City Corp. in Cleveland, said in an interview this week."