Credit crisis: half way through?

Case-Shiller is down about 20% since the peak in real terms, and we have another 20% to go before the metrics are back in normal range. This would give back all the housing gains since the late 90s. Commercial real estate and consumer debt crises have yet to materialize but are likely to follow.

10 million Americans are underwater on their mortgages. The UK is in even worse shape, with a 70% drop in mortgage approvals.

Bear is gone.

Paulson and Treasury looked closely at the GSEs and decided it would be better to move now than to pay more later. Was there a trigger event? Were there scared Chinese bankers on the phone with Paulson? (Who do you think are the biggest holders of GSE paper?)

The Korea Development Bank looked closely at Lehman and took a pass. Lehman's stock is now in free fall.

Merrill financed 75% of its recent sale of $30B in mortgage securities at 22 cents on the dollar. The counterparty is a straw man, so Merrill will have to take the securities back if the price falls even further. That means Merrill could still go the way of Bear and Lehman eventually.

No mark to market, no resolution in sight.

Socializing losses after privatizing gains in the fat years.

Of related interest: great podcast interview with Robert Shiller. Act now, because Bloomberg has a tendency to take these down after a while.