1 million mortgage loans will default in 2008

For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008. Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year. Existing home sales will drop 12 percent and existing home prices will fall 4.5 percent, Washington-based Fannie Mae says. Lehman analysts estimate almost 1 million mortgage loans will default in 2008, up from about 300,000 this year.

"We're only halfway through the housing shock,'' said Ethan Harris, Lehman, the fourth-biggest U.S. securities firm by market value. "It's just a matter of time before the weakness spreads to the rest of the economy.''

Comment -- Nasty, but the market obviously is well aware if all of the above. Please fix the following firmly in your mind. If the November lows hold (Dow 12743.44, Transports 4366.60) then all of the above has been fully discounted in the market's price structure. But if both of those lows are violated, we're in for some really tough times and almost surely we're heading into a first-class recession.
From: DowTheory