SAN FRANCISCO — There is a 45 percent chance that the U.S. economy will spiral toward recession in 2008, as real estate foreclosures and gasoline costs continue to escalate, economics professor Ken Rosen said in a presentation today.

Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at University of California, Berkeley, said that if gasoline prices exceed $4 a gallon and oil prices top $100 a barrel, “it’s a pretty sure thing that a hard landing rather than a soft landing (will) happen.”

He advised attendees of an annual Real Estate and Economic Symposium, organized by the center, to plan for the worst.

Home prices may already have fallen about 5 percent to 7 percent nationally, and those price declines may represent only about half of the declines still ahead. New-home prices may fall about 25 percent in some markets.

“It all goes back to the fact that we had a bubble in housing created by bad lending practices,” he said.

While the volume of foreclosures is relatively small thus far, Rosen said that the foreclosure rate may not peak until 2009.

Barring a major intervention to restructure mortgages for those facing foreclosure, Rosen expects the foreclosure rate for subprime mortgages to rise from a current level of about 8 percent to as high as 20 percent to 25 percent, with lower-risk alt-A foreclosures peaking at about 15 percent and the foreclosure rate for prime mortgages reaching 3.5 percent to 4 percent.

The subprime market will be a bad investment for some time, Rosen said, as it had grown to an unsustainable level of about 22 percent of the overall mortgage market in 2005 and 2006.

“Do not go into that (subprime) business,” Rosen said. “The market share in subprime should be about 5 percent. Do not catch that falling knife.”

The credit crunch “is substantial in residential real estate and it’s spreading to commercial real estate,” Rosen said.

Credit losses related to the mortgage mess and rising foreclosures could top $400 billion, he said, with about $50 billion to $60 billion in losses already announced. “There’s a lot more to come.”

Rosen takes issue with those market analysts who say they didn’t see any of this coming.

“For these people to say it’s unanticipated … it happens every decade. There’s no surprise to this at all,” Rosen said.

The securitized system for mortgage financing that the nation had relied upon for the past four or five years, if it doesn’t reopen, could prolong the credit crunch “for a lot longer than we think,” Rosen said.

The stock market has already been taking hits for the credit problems and anticipated rise in foreclosures, he said.

U.S. job creation and the resilience of the global economy are still sustaining the U.S. economy, though Rosen said that is subject to change.

The dollar has been dropping in value against other major currencies, leading some nations to diversify investments away from the U.S. dollar, and the United States has a huge trade imbalance, he noted.

Because of the rising value of the euro against the U.S. dollar, the nation is effectively “on sale” for Europe and some Asian markets, Rosen said.

The rising stock market in China has created a speculative bubble for that nation’s economy, he said. “I really do think China is in a bubble stage. When it bursts, I don’t know.”

A market decline in China could spell more troubles for the U.S. and the global economy, he said.

Income distribution has become skewed in the United States, Rosen said, and he expects that individual and capital taxes will be rising — no matter the rhetoric that candidates may offer in this election year. Also, inflation will likely rise, he said.

“Our industrial base has been decimated,” Rosen said, noting that Michigan, once strong in manufacturing, is in a recession. “I worry that a lot of central cities in the Midwest are dying.”

Southern California, too, is in a recession or at the edge of recession. The fall of the subprime market hit hard in Orange County, Calif., a base of operations for some subprime lenders, he said.

Miami and Las Vegas are among the markets reeling from speculative real estate investments and a subsequent rise in foreclosures.

While New York City has been strong economically, Rosen said he expects a lot of layoffs and cutbacks by financial firms hit hard by the credit crunch.

Rising oil prices highlight a need for the U.S. to reduce dependence on foreign oil, Rosen said. “We have to get away from our dependence on oil.”

“We have become addicted to cheap oil. We’ve become addicted to cheap Chinese goods,” he said, though the economy will dictate change. “We’re going to have to have a lower relative standard of living compared to the rest of the world, a different quality of life for the next generation.”

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