First a refresher on where Housing is now from Dr. Case, who helped create the Case-Shiller Index (MiM is way more bearish than Case): (Case says places down 10-12% are not in freefall, yeah well get ready for it, unemployment is rising Dr Case!!!)

MiM agrees with the poster of this youtube chachiarkola, who notes the following:

Now that the regions that Dr. Case mentions as having moderate declines to date (New York, New Jersey, Massachusetts, etc.) have neared or surpassed 6% unemployment, watch for their housing markets to come under the type of severe pressure already seen on the west coast (20-40% home price declines).

Marty Feldstein (no not THAT one silly) let the cat out of the bag in an interview with CNBC’s Steve Liesman today.

VIDEO HERE

Discussing the kind of stimulus that should come out of Washington, with Martin Feldstein, Harvard University professor, President Emeritus of the National Bureau of Economic Research, & Council of Economic Advisors former chairman under President Reagan, with CNBC’s Steve Liesman.

Thousands of economists are in San Francisco for the annual American Economic Council  summit, and the stimulus is top of the charts for talking points.

Feldstein, of Harvard, and current President Emeritus of the NBER, said per his talks with PEBO fiscal policy economic team, they are targeting late February for the stimulus, some time around President’s Day.  He indicates all the FED can do is remain in a holding pattern until PEBO brings stimulus to the table.

Feldstein says it PAINS him as a conservative to say this but the deficit spending is needed; we are facing an economic downturn worse than anything he has seen in post war period…and that consumers are cutting back on spending leading to a need for government spending as a necessity to drive demand.

So forget all that talk of a bill ready to sign on PEBOs desk on Inauguration Day.

Feldstein confirms what we at MiM have been hearing and reporting; HOUSING will be key to this package.  Forget what you have heard in the proposed stimulus package breakdowns to date, it is housing that is key to the financial and economic advisers. The housing plan will include principle write downs and an attempt to build what Feldstein calls a ‘firewall’ to stop a continued drop in housing values from pushing more Americans underwater on their LTV ratios…will it come from Son of Tarp or the stimulus? No word yet but it is coming….

Keep in mind most economic forecasts worth their salt call for an additional 15% drop in home values in 2009…Feldstein is CLEAR that the FED actions alone will NOT repair housing, it is merely keeping it in a holding pattern, he says all the fiscal stimulus will do nothing without a housing program…

Feldstein says if we are lucky, we will see a bottom at the end of 2009. This puts the kaibosh on the hoped for 2009 recovery that some rose-colored glasses wearing talking heads have called for.

And PS like MiM, Feldstein IS worrying about inflation down the road, the FED in principle knows how to control it later, the reasons to worry abut it are if the political consensus will start to shift and they will let inflation go too far, as the expansion of the economy, when it does come, is going to be very s-l-o-w AGREE AGREE! He worries over a repeat of the 70s! AGREE!

So the good news is that housing will be addressed, the bad news is it is looking as though we will not see anything in  stimulus from PEBO until late February.

If that delay is to ensure a Quinn appointed PEBO replacement and Franken legal challenge win get them to 60 to invoke cloture, that is disappointing, but Mitch McConnell has been making noises about blocking any stimulus (despite that he should know better, his wife is sec of labor fer gawdssake) and the GOP National Party is trying to find a leg to stand on and that leg may be blocking any recovery package, so perhaps PEBO does not want his first swing out of the gate to be a miss and he is waiting for that cloture invoking magic number to end debate and get a vote…well they are driving and we are all along for the ride!

I hope the 7.00% of Americans late on their mortgages can hang on a few months longer..God Bless.

Here is Feldstein in October and November:

Two leading economists discuss market turmoil, the falling dollar, and the role of the U.S. Federal Reserve.
Speakers: Martin S. Feldstein, President, National Bureau of Economic Research, Inc.
Allan H. Meltzer, Visiting Scholar, American Enterprise Institute for Public Policy Research
Presider: David R. Malpass, Chief Economist, Bear, Stearns & Co. Inc.