I think things are getting worse. I know people in my neighborhood who have been riding it out. Some are really getting stressed now. I am think the middle of next year or sooner - a lot of the middle class that has been hanging on may start going under.
The markets are overvalued and this Fall (soon) is not going to be good.
I’m one of the ones hanging on ,,, my thinking is if I can make it til 2q ‘10 things will have gone downhill again (probably to a significantly lower level than we have yet seen) and something drastic will have been proposed or passed and monetarily “nothing” will really matter except survival. The middle class is stressed as you stated ,, there are no “lifelines” left , the 401k’s have run dry , taxes are going up (especially state taxes).. I disagree that the markets are overvalued ... I feel the high valuations are merely a reflection of the falling dollar,, I do agree that this 4q ‘09 could be bloody as people try to hold onto gains by selling ... we’re certain to have hundreds of “worst Christmas ever” news stories ...
My parents live in a nice, older but mid-range suburban neighborhood in the Detroit area. They saw prices on their street go from around $200K (asking $209K at the height in 2006) down to actual sale prices of lately of $50K (for the house next door) and $61K (for the house across the street). That’s in a 3 year timeframe, meaning mortages with more than a few years left on them are universally underwater. Somebody is losing tons of money these days, and I doubt if highly leveraged financial companies can sustain those kinds of continuing losses. Ugh, ugh, ugh.