Economic Outlook

While much ink has been spilled on the current liquidity crisis and the government's countless efforts to get the markets "functioning" once again, very little has been applied to the current economy. Simply put, the economy is sinking fast.

To date, our economic woes have been driven by the housing market - more accurately, the mortgage market. The inability of funds to flow from those who have capital to those who want to borrow it, particularly to purchase or refinance a home, is driving all economic and market-related problems today.

Until we can get the mortgage market functioning, we are only treating symptoms rather than causes. The first step in this process will be the reformation of Fannie and Freddie in (hopefully) some other construct. Look for debate to begin in Congress in the first quarter and to continue interminably.

Over the last ten years, these organizations have consistently been in the top 20 in terms of lobbying dollars according to the Center for Responsive Politics. With over $100 million at stake in the form of these past lobbying efforts, no solution will be determined soon.

In the meantime, future mounting job losses will place more homeowners in the position of "sell or walk" providing another dip downward in this already broken sector. A long cold winter to come, indeed.