Michael Pento: Double-dip recession is now undeniable

05-06-2011 • marketwatch.com

But perhaps most importantly, more evidence of an official double dip in home prices was found in a report from Clear Capital. The report stated that its monthly index is now below the prior all-time low set in March 2009. Two highlights (or lowlights) from the report: ¦ Year-over-year national home prices are down 5%. ¦ Home prices have dropped 11.5% in the last nine months, a rate of decline not seen since 2008. The saddest news of all is the fact that over 25% of all homes with a mortgage are underwater on that loan. Home prices that continue to fall will bring that number higher and create the vicious cycle of a greater percentage of mortgage holders with negative equity, which causes more inventories, which leads to falling prices. What’s a Fed head to do? The truth is that a double-dip recession was temporarily held in abeyance through a massive government effort to boost consumption. But that intervention in free markets was destined to fail from the beginning. Quantitative counterfeiting Part 2 hasn’t even ended yet, and this ersatz economy that is based on borrowing and printing is already starting to falter.