by Calculated Risk on 3/15/2007 02:33:00 PM

From Reuters: Mortgage malaise may bring recession: Merrill

House prices could tumble 10 percent this year and force the United States into recession if a credit crunch taking shape in the mortgage market gathers steam, Merrill Lynch said in research notes this week.
...
"It is not inconceivable (given what is happening now to mortgage originations) that we end up with something closer to a 10 percent decline in home prices this year," Merrill Lynch said.
...
However, if the inflation-fighting Federal Reserve were to keep rates unchanged to contain price growth -- instead of cutting by 1 percentage point in the second half of 2007 as Merrill expects -- then this would put the probability of an outright recession in the second half at "very close to 100 percent."

Wow. And I though I was bearish on housing. My prediction was for a 1% to 3% nationwide price decline in 2007 (as measured by OFHEO).