Sage Advice Quarterly Market Review 2Q2008

The stiff housing-related headwinds battering the U.S. economy are still blowing in, keeping the credit markets in a state of flux and smothering the prospects of a quick economic recovery. Contrary to some expectations, the latest data obliterated any hope that the worst of the housing meltdown was behind us. New home sales are plunging, inventories are bulging, builders are retrenching and property values are sinking, putting downward pressure on household wealth. The surge in foreclosures and delinquent mortgage payments continues to erode the value of mortgage securities, fostering ever-larger markdowns and write-offs at financial institutions. With lenders forced to boost reserves to compensate for mounting loan losses, they are focusing more on raising capital to bolster balance sheets than on lending to consumers and businesses.