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by CareyBot

Rates are in free-fall on news of an outright decline in August payrolls, and big downward revisions of the June and July reports. Agency conforming mortgages are down to 6.25 percent, jumbos still sticky near 7 percent, and no change in availability: high-quality Alt-A still very pricey, as is any high-LTV lending. I think the economic pattern is clear. For the last five weeks we have been in an uncontained credit crisis -- not a "liquidity" problem, but an evaporation of balance-sheet value exposing lenders, forcing fire-sales of collateral, and a sharp contraction of credit availability. The economic effects of this crunch lie ahead; it is far too soon for them to have undercut August payrolls, let alone June-July. The payroll weakness is a separate event, a pre-recession signal all i...