Sub Prime is a huge mess; and housing prices are down and are likely to keep going down. The forecast of the US economy growth rate of Q4 this year was recently downgraded by Maroeconomic Advisers to 1.6% from 2.7%
A US recession appears on the way.
Each time there has been a housing crises, the US has slipped into recession, except 2 times: 1951 and 1967: Korea War and Vietnam War. Defense expenditure triggers the money multiplier which pulls an economy out of recession.
Will the US goto war in Q2 of 2008 with Iran to pull out of recession?