I may be completely wrong in my assessments, but using history as a guide it is a liquidity crisis that will wreak havoc in the near future and further compound the economic problems we face today.
I believe that this will cause a falling equity market (falling further that is), a falling bond market (in price or rising rates) and a falling housing market at the same time, with the equity market bottoming first.
The bottom in the stock market will be as apparent to the participants as the top was -- in other words, it won't be. The true bottom is when everyone is convinced that the stock market is not the right place to invest for the long haul and fundamentally change their belief.
Just like the true top is where everyone is convinced that only upside lies ahead. This is real close to where the real estate market is IMO.
Sure, some areas will be hit harder than others and there will even be SOME winners, but I think the general trend will be sellers. There will just be little liquidity to support further gains. Real estate is the last to go in any cycle. It is the most illiquid, there is no fixed increments and it is the last thing one considers selling in a crisis.
How and why any market does what it does is difficult to see in advance, but easy to see in retrospect. It is difficult for people to see in advance because they want to apply reason and rationales. Market action very seldom seems reasoned or rational at the turning points.
The bottom line is that when mass psychology ebbs (or flows) to the extreme in one direction, it invariably goes to the other extreme. The question only becomes the timing.
Hope everyone has a great Memorial Day!
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