THE TURMOIL OF THE past several months has had one advantage: we now have a clearer picture of where the U.S. and world economies are headed. And how monetary and regulatory policies are likely to change.
The world economies are going to slow. Here in the United States home sales are down and inventories of unsold homes are at levels not seen in decades. Prices are expected to fall 7 percent this year, and another 7 percent in 2009. Foreclosures are rising. New construction is down, resulting in layoffs of building workers. The mortgage business is in the doldrums, resulting in layoffs of the desk-bound, paperwork creators attached to the home-building industry.
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