It’s hard to argue that the housing market will improve until A) we’ve flushed all of the foreclosures through the system and B) the economy begins to improve. And until unemployment shows some serious improvement, don’t expect the economy to feel like it’s getting better. High unemployment is both a symptom of a bad economy [...]

Today’s unemployment report was terrible. Not only were the 18,000 jobs created more than 100,000 below expectations, but previous months were revised down sharply as well. The deeper you dig into the details, the more troubling this jobs report is.

The student loan problem connects very closely to the future success or issues housing will face in the next decade. A large part of the housing machine is based on stable and predictable home price appreciation over long periods of time.

I am asked all the time what my biggest worry is, and I quickly answer, the European Sovereign Debt Crisis. Of course, then we have to think about the Japanese Sovereign Debt Crisis, followed by the one in the US; but today we will focus on Europe. The biggest bubble in history is the bubble of government debt. It is a bubble in a world full of pins. It will take a great deal of luck and crisis management to keep it afloat, without wreaking havoc on the financial system and markets of the world.

I think the crucial point will be reached in late 2013. If the bond market sees a serious move to control the deficit, I think they let us “skate.” Then we Muddle Through. But if not, I think we begin to see some real push-back on rates then.