Downturn in Home prices, Banks, Retailers: What's next?

There are headlines for almost 2 years now, that home prices in US and worldwide have been falling dramatically. If we consider the fact that these same prices when they were rising with interest rates at their lowest in 2004 and 2005, allowed the US consumers to splurge in consumerism and keep on buying, has all but come to end and is declining, and fast!

First the home prices went downhill, then the banks who made them easy for the consumers went downhill, then the consumer who could not use his house as an ATM (by refinancing) stopped buying retail goods. Lack of retail consumer spending on new goods and services has spread far and wide and now includes declining car sales, declining hotel average room rates, declining air fares and declining business for any country to do anything with tourism inlcuding places as varied as Thailand, India and Dubai among others.

Mumbai terror attacks, Thailand protests, Israeli attacks, Greece protests certainly did not help the global downturn. Most currencies have plummeted taking the foreign investments of various countries along with it.

Additionally, oil prices have gone down from the average price of 2008 estimated ot be at USD 100. This will help inflationary pressures to reduce dramatically in 2009 but because the consumer is not willing and unable to buy more goods and services, this has therefore caused the scenario set for a global recession or a depression, mainly due to lack of demand. The G-7 countries are expected to have a hard time in 2009 due to thier free wheeling rules and lack of supervision allowing financial institutions to gamble with consumers's money and will pay a very hefty price (the toll has already started with the demise of Lehman, Washington Mutual, Fannie, Freddie, Bear Stearns, AIG, Madoff etc.). Wealth of the richest people in the world has almost evaporated since most of it was tied to stocks.

Emerging Markets are expected to take the lead and provide relief with growth of at least 4-6% of GDP in 2009. Investors would be wise to make some investments, despite the foreign exchange risks in emerging markets as a whole and spread their investments carefully. With stocks on 'a sale of the century', now is a good time to slowly tread into waters over the course of next few months for whosoever has the cash. If we take cues from the private equity firms and soveriegn wealth funds, they have been making some excellent deals as the market has turned into a buyers market with a desperate need of cash/investment, instead of a sellers market.

Housing
Home prices fall as on 30th Oct 2008
October Home Prices in 20 U.S. Metro Areas Fall 18% (Update3)

US home prices fall at record rate of 18%

Retailers
25% of US Retailers could face closure in coming months, already Woolworths and others in Europe are in great difficulty
US retailers face grim outlook

U.S. Weekly Retail Sales Fall Most in Almost 6 Years (Update3)