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Mortgage markets, inflation hamper recovery

No telling when housing markets will turn, say experts

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SAN FRANCISCO -- Call it the trillion dollar question: When will housing markets turn? Experts like PIMCO managing director Bill Gross say that when all is said and done, the lending and finance industry could tally up $1 trillion in cumulative losses in the housing downturn. Because banks and other lenders need to maintain about $1 in capital for every $10 they lend, that could translate into a $10 trillion contraction in borrowing, said Patrick Stone, chairman of The Stone Group, during a panel discussion at the Real Estate Connect conference. Considering that U.S. gross domestic product (GDP) is around $13 trillion, the impact on the economy could be "very severe," Stone said. The credit crunch is like a guillotine hanging over the economy’s head, and with dozens of banks thought to be on the Federal Deposit Insurance Corp.'s watch list, it's hard to feel at ease. "The number one thing I focus on is the stability of the financial system," agreed Ne...