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Bye-bye equity

Commentary: Underwater homes snag economy

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The bond market rallied this week and long-term rates fell, unfortunately in response to lousy economic news. Lowest-fee mortgages fell to 5 percent, and the 10-year Treasury note has approached its next key level: 3.6 percent. Every item in this grim litany was forecast to improve, and none did. The Conference Board's measure of consumer confidence in February collapsed to present-conditions 19.4, the worst since 1983. New claims for unemployment insurance jumped again, now almost back to 500,000 weekly. New mortgage applications fell 8.5 percent, now to 1997 activity. January orders for durable goods fell 2.9 percent, excluding volatile transportation and military sectors. January sales of new homes suffered an 11.2 percent cave-in (the lowest rate of sales since 1963), and sales of resale homes dropped 7.2 percent. Thursday morning's business channels broadcast striking visuals: Federal Reserve Chairman Ben Bernanke on split-screen left, asserting "nascent recover...