If Citigroup (C) chairman Win Bischoff is right, then his bank and the US economy are going to be cornered by a deepening recession for the next two years. According to Reuters, the Citi chair "has warned that house prices in Britain and the United States are likely to keep falling for another two years."
The implications of his comments go well beyond housing. Prices for home have dropped over 10% this year and in some regions including parts of California and Florida housing has slipped 20%.
A housing depression that moves deep into 2010 would certainly take the wind from the sails of any recovery for the earnings of banks and brokerages. The auto industry would have no chance of breaking out of its present funk, one which threatens the independece of the entire sector.
Bischoff’s statement, if correct, fuels predictions of tens of thousands of more foreclosures in the US and puts a knife through the heart of any recovery in the housing industry.
It is, perhaps, the most negative statement made by any US bank official since the beginning of the credit crisis.
Douglas A. McIntyre
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