More bad housing market and general financial news

Countrywide, the nation’s largest mortgage lender, has to borrow an $11.5 billion line of credit; new home starts are at their lowest in more than a decade; and more and more investors are expecting a Fed rate cut, and one of half a percentage point, not a quarter point.

But, what if, as I posted earlier Bernanke and the Fed are still worried enough about inflation to only cut a quarter-point, or possibly even still sit on their hands a few more weeks? In addition to inflating home prices, mortgage rates have gone back up again, even though T-bills have gone back down.

The Dow is showing more and more signs of weakness; Dell having to restate earnings, which will only intensify SEC investigation, adds to the mix. I’m about to up my 12-month recession odds from 2-5 to 1-2.

Cross-posted at Socratic Gadfly