Some housing bubble news from Wall Street and the Washington Post. "The chief executives for two of the nation's dominant mortgage-finance companies traveled to Wall Street yesterday. Richard F. Syron, Freddie Mac CEO and Fannie Mae CEO, Daniel H. Mudd, forecast continued declines in home prices. Syron predicted home prices would ultimately bottom out at an average of 10 percent below their peaks, and Mudd predicted average peak-to-trough declines of 10 to 12 percent nationally."

"But Syron outdid Mudd in expressing remorse for past business decisions and in describing the trouble that may lie ahead. If home prices decline by 30 percent, as one noted economist has said could happen, 'We're all going long apples and boxes to sell them in,' Syron said, invoking an image from the Great Depression."

"Syron traced the trouble in the mortgage business to a housing bubble and accepted some responsibility. Fannie Mae and Freddie Mac contributed to the problem by spreading the message that everybody should own a house, he said. In fact, many people who should not have owned houses bought them, he said."

"One questioner accused Syron of making a strategic error in failing to adjust to clear signs of looming trouble as early as 2005. Syron agreed that Freddie Mac should have tightened its lending standards sooner. Although Freddie Mac was an early bear about the real estate market, he said, it did not foresee the severity of the problem."

The Associated Press. "The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise."

"'I honestly think it's going to get tougher before it gets better,' Syron said."

"While the mortgage crisis has brought a rising wave of foreclosure notices into public view, less evident have been 'pictures of people standing with furniture on the lawn' after being forcibly evicted from their homes, Syron said. 'As that begins to happen, and it will happen, I am afraid of the impact that this has.'"

From Bloomberg. "Bank of America Corp. CEO Kenneth Lewis said losses from the credit markets will be higher than the $3 billion estimated last month. The second-biggest bank by assets after Citigroup Inc. will set aside another $1.3 billion in the fourth quarter to cover losses, mostly at its home equity and credit card units, he said."

"Lewis said writedowns for debt instruments known as collateralized debt obligations, or CDOs, are 'unknowable.'"

"Lewis said fourth-quarter earnings will be 'quite disappointing'' and credit markets 'will probably remain challenging into next year.' The 'subprime crisis has created considerable dislocations in the capital markets' that probably will stretch into 2008, Lewis said."

"'We expect charge-offs to increase next year, particularly on the consumer side,' Lewis said in response to a question."

"Wachovia Corp., the fourth-biggest U.S. bank, may double its provision for loan losses in the final quarter and said it can't predict when credit markets will return to normal."

"Wachovia will set aside $1 billion to cover bad loans, an increase from the previous estimate of $500 million to $600 million, the company said today in a regulatory filing."

"Writedowns in October and November tied to securities backed by subprime mortgages and collateralized debt obligations already equal the $1.34 billion pretax loss reported for the entire quarter ended Sept. 30, it said."

"'None of us know what inning we are in,' CEO Kennedy Thompson told investors."

The Orlando Sentinel. "Local governments will be able to withdraw no more than a quarter of the $12 billion they have invested in a Florida-run investment fund before next spring -- because the fund doesn't want to sell the investments at a loss."

"Investing agencies, including many in Central Florida, also found out that at least $350 million of their cash is tied up in investments whose ratings are so low that their value 'truly is a question mark,' according to Simon Mendelson, a top manager with BlackRock, an investment firm hired by the state to salvage the pool."

"It won't be known until later next year, when the investments mature, whether they'll be worth anything, he added." "BlackRock segregated about $2 billion in 'nonperforming' investments in an account separate from an additional $10 billion that the SBA maintains is in highly rated and safe investments."

"SBA officials say they cannot sell off investments, even the good ones, because the market for them is bad. They hope that if held long enough, they will eventually pay off."

From Reuters. "Bank of Canada Governor David Dodge says banks must work together to resolve one corner of the Canada's troubled debt market, a Canadian newspaper reported."

"The soon-to-retire governor said all banks will be hit if the asset-backed commercial paper market collapses, losses widen from leverage, and credit constricts and borrowing dries up. 'We have a collective interest in the whole thing not going into a shambles.'"

"Dodge said losses can multiply because of leverage. 'Because they're levered, the amount of global assets that would be affected if all this went down would be eight or 10 times the nominal value of the notes, so you're starting to get into the C$200-billion, quarter-trillion-dollars' worth.'"

"'So everybody, including the international banks, have a real interest in trying to somehow get this thing resolved because if these go down and a whole pile of SIVs (Structured Investment Vehicles) elsewhere go down, then you've got an immense number of these assets being dumped on the market at the same time,' he said."

The Guardian. "Kazakh President Nursultan Nazarbayev promised on Wednesday to prevent any local bank from collapsing, and criticised credit ratings downgrades as 'not objective.'"

"A credit crunch caused by the U.S. subprime mortgage crisis has hit Kazakhstan's fast-growing banking sector hard, prompting Standard & Poor to downgrade the country's sovereign ratings in October. On Tuesday, Standard & Poor's cut its outlook again, this time to negative from stable for eight Kazakh banks."

"Data showed earlier in the day that growth in real estate prices slowed to around 50 percent year-on-year in November from a peak of over 70 percent during summer months. Month-on-month, prices were almost unchanged in November."

"'The fact that the ratings agency pointed to longer-term refinancing and asset quality risks, rather than the short-term liquidity problems, as the main issues Kazakhstani banks face is very negative for the industry,' UniCredit said in a note."

From Newsroom Finland. "Finnish insurer Tapiola said Wednesday that the growth in Finnish house and flat prices seemed to be grinding to a halt."

"Vesa Immonen, the head of Tapiola's real estate investment branch, said signs on the housing market indicated a cool-down, adding the time properties spend on the market had risen markedly."

"Julia Gavin sold more than a house a week as the Spanish real-estate boom peaked last year. Now that business is drying up, she's sharing leads with competitors, reckoning a partial commission is better than none at all."

"'We're up to our ears with work, but no sales,' says Gavin, who works near Madrid. 'It's horrible.'"

"Spain is suffering collateral damage from the collapse of the U.S. market for mortgages to the riskiest borrowers and the swoon in U.S. real estate. Spanish banks have exceeded their European peers in tightening lending standards, prompting a plea from Prime Minister Jose Luis Rodriguez Zapatero not to strangle growth."

"'The end of Spain's 'fat' years will hit the whole region,' said Ralph Solveen, an economist at Commerzbank AG in Frankfurt."

"Three-quarters of Spain's 60,000 property companies may end up bankrupt, according to Fernando Rodriguez de Acuna M., an analyst at a real-estate research firm in Madrid. 'They've been caught by the two things at once, the demand problem and the liquidity problem,' he says. 'Everyone is going to have problems.'"

"Spanish banks' own borrowing costs are rising -- when they can borrow at all. Banco Bilbao Vizcaya Argentaria SA, Spain's second-largest bank, was able to sell just a quarter of a 6.3 billion euro ($9.3 billion) bond issue backed by mortgages and corporate loans, a person familiar with the deals said."

"Bankinter SA pulled a sale of at least 500 million euros of mortgage- backed notes."

"Gavin and her clients are paying the price. In one case last month, she says, she thought she had a sale after three months of negotiations among buyer, seller and mortgage lender. Then Ibercaja SA, a Spanish savings bank, refused her client a loan covering the 168,000-euro ($247,000) purchase price."

"The bank said it had concluded the client was overpaying for the property in El Escorial, near Madrid. 'The banks are coming up with a million excuses not to give loans,' Gavin said. 'They don't want to take any risks.'"

From CNN Money. "Former Federal Reserve Chairman Alan Greenspan in a commentary published Wednesday argues that Fed policy under his leadership was not the cause of the housing bubble that precipitated the current crisis in financial credit markets, as some have charged."

"Instead he argues in the Wall Street Journal that the credit markets melted down in August because 'risk had become increasingly underpriced as market euphoria, fostered by an unprecedented global growth rate, gained cumulative traction.'"

"And he says that if it hadn't been problems with rising defaults of subprime mortgages and declining home prices, some other problem in some other market would have triggered the crisis."

"'The crisis was thus an accident waiting to happen,' he writes."

"'I do not doubt that a low U.S. federal funds rate in response to the dot.com crash, and especially the 1 percent rate set in mid-2003 to counter potential deflation, lowered interest rates on adjustable-rate mortgages (ARMs) and may have contributed to the rise in U.S. home prices,' he wrote. 'In my judgment, however, the impact on demand for homes financed with ARMs was not major.'"

"'Demand in those days was driven by the expectation of rising prices - the dynamic that fuels most asset-price bubbles,' he added. 'If low adjustable-rate financing had not been available, most of the demand would have been financed with fixed rate, long-term mortgages. In fact, home prices continued to rise for two years subsequent to the peak of ARM originations.'"

"While he was chairman of the central bank through January 2006, Greenspan always denied there was a bubble in the nationwide U.S. real estate market, saying only that a certain number of metropolitan real estate markets could see declines in home values."

"'The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when...market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World,' Greenspan wrote."

"Greenspan also wrote that he believes there was little the Federal Reserve could have done to prevent credit markets from seizing up this August."

"'After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own,' Greenspan wrote."

"In the article, Greenspan predicted credit markets would recover from the current crisis only when the inventories of newly built homes have been mostly liquidated, and deflation in housing prices ends."

"'That will stabilize the now-uncertain value of the home equity that acts as a buffer for all home mortgages, but most importantly for those held as collateral for residential mortgage-backed securities,' Greenspan wrote."

The Mercury News. " As Alan Greenspan tours the world promoting his memoir, an average of 12,000 Californians and 55,000 homeowners across the nation receive a foreclosure notice every week, the highest in American history."

"Next year, a record 2 million adjustable rate home loans are scheduled to spike upward nationwide, putting 1.4 million homeowners at risk of foreclosure. We are at the tip of the iceberg in a rapidly accelerating mortgage meltdown, and the prime cause started with the former Federal Reserve chairman's policies."

"By reducing the federal funds rate to a mere 1 percent in 2003 and refusing to increase it for a year, Greenspan and the Federal Reserve created the economic conditions for rampant investor speculation and a loosening of loan underwriting standards as lenders frantically competed for market share."

"Greenspan shunned increased regulations, even though he has now admitted knowing about abuses in the subprime loan industry."

"Blinded by the irrational exuberance of surging home prices, Greenspan promoted the non-traditional mortgages that have devastated so many homeowners. In a speech on Feb. 23, 2004, Greenspan stated consumers were paying too much for fixed-rate mortgages and asked lenders to provide 'greater mortgage product alternatives to the traditional fixed-rate mortgage.'"

"When a person of Greenspan's influence and stature promotes alternative mortgage products, lenders and consumers listen."

"For many homeowners, especially the hundreds of thousands that have already defaulted, there will be very little the state or federal government can do. They can thank Greenspan. Maybe he can donate the profits of his book to those families who have already lost their homes."