Calculated Risk points to an interesting but short article at Bloomberg by Meredith Whitney in which she postulates that once the Fed withdraws its support for the mortgage backed securities market, mortgage rates will move up and the banks will be faced with more writedowns.

Anyway you slice it or try and put a happy face on it, the news on housing over the past few days has been pretty sobering. I don’t take the decline in housing starts as all that bad a development, the last thing the markets need is more supply, but the decline in mortgage applications is significant.

Felix Salmon seconds Paul Krugman’s contention that the AIG (AIG) bailout and bank bailouts in general have confused and soured the populace on any further stimulus bill. I think that’s just part of the burr under the saddle of the electorate.

When time permits I read a lot of blogs. When it’s tight I make sure to visit a couple selected sites. One is Yves Smith’s Naked Capitalism. I frequently disagree with her and she often sets my blood boiling but she never fails to get past the trivial and key in on real issues.

Gretchen Morgenson’s Times article today is enough to make you retch.

Buried in the law extending unemployment benefits and reauthorizing the tax credit for homebuyers was a “little” gift to any company that happened to lose money in the past five years. Here’s how she describes the largesse:

One of the unfortunate corollaries to my enforced absence from regular blogging has been little time to carefully follow the threads of discussion on various topics among the blogs. Curiously, I find that when I do have time to devote to a bit of reading, much of the discussion has changed very little.

It’s eerie how much official government policy is beginning to mirror those that were tried with no success during the commercial real estate debacle of the 1980s and early 1990s.

There seems to be a lot of agreement that the positive GDP report for Q3 was in retrospect not as positive as the headline number might lead one to assume. Coupled with the disappointing personal income data on Friday as well as the sales numbers and many seem to have concluded that we’re still deeper in the woods than we think.

An interesting development this evening. The FDIC seized nine banks which are all a part of a holding company in Oak Park, Ill. Here is a link to the WSJ article on the demise of these institutions as well as a link to the FDIC website.

This is old news but I wanted to throw out a couple of thoughts about Ken Lewis and his impending departure. I have no great admiration for the guy nor do I think he particularly deserves a whole lot of sympathy, but I do think that some of the vitriol that has been directed his way by the MSM and the blogosphere has been over the top.

Hell of a recovery, isn’t it?

Let’s see. Auto sales as predicted plunge after the artificial C4C stimulus, ISM falls short of expectations, personal consumption expenditures are up but throw out auto purchases and it doesn’t look all that great and the unemployment numbers went the wrong way.

Donald Maron has a great post on Treasury securities and the current maturity schedule. It’s short and to the point.

Bottom line, the Treasury has been financing the current deficit with short dated securities which makes good sense but sooner or later you have to lengthen them as rates rise. Maron has a good suggestion about how to go about that.

Thank God we still have Paul Volcker out there throwing out a few straight comments from time to time. In an era when the likes of Tim Geithner can speak volumes and put themselves on record on both sides of every issue, it’s refreshing to see the great man speak his mind.

I’ll jump back into posting with a few thoughts on housing.

First, Case-Shiller is out with its July home price survey. It followed the trend of improving prices established over the last couple of months. Nationwide prices were up 1.6% and the number of cities showing price declines dwindled to just two. Here are the numbers for the twenty cities in the survey.

The statement from the G20 Finance Ministers meeting in London would appear to constitute a win for Tim Geithner and Alistair Darling. I use the word appears because it is always wise not to take these sorts of pronouncements at anything more than face value.

Here’s an update on part of the commercial real estate sector’s loans from Floyd Norris at the NYT. He delves into the growing problems with construction loans.

Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks.

Remember Taylor, Bean & Whitaker, the Ocala, Florida mortgage bank that crashed spectacularly last week and was heavily involved with failed Colonial Bank of Birmingham, Alabama? Well they’re not done yet wreaking havoc.

BusinessWeek’s economist, Michael Mandel, continues with his discussion of private sector job growth for the last ten years. The bad news? A month or so ago it was trending towards zero. Today it managed to get there.

That’s right, for the past ten years we have lost more jobs in the private sector than were created. Here’s the graph: