Looking at fourth down and goal with time running out, and having resorted to every trick in the playbook, including lending billions to help out the nation’s — and the world’s — struggling financial systems, Ben Bernanke and his team over at the Federal Open Market Committee tried a run up the middle one more time Wednesday, lowering the ever-popular federal funds rate by half a percent to 1 percent.

A huge rally on Wall Street the day before (almost 900 points) anticipated the cut, although some analysts were hoping for more than 50 basis points. More importantly, many are looking for this move to signal the lowering of mortgage rates to help out struggling homeowners trying desperately to stay in their homes.

In its official statement, the Federal Open Market Committee for the first time in many months did not cite the nation’s continuing “housing contraction” as one of the primary reasons for the cut.

This time the committee is citing a decline in consumer spending, slow economic activity overseas and “the intensification of financial market turmoil” as key concerns. AND, the committee seems to be patting itself on the back this time for all of its recent policy decisions, although it still admitted that “downside risks to growth remain.”

As The New York Times is reporting, the Commerce Dept. released its report on consumer spending this morning and the news is not good. Personal consumption for Q3 2008 fell at an annual rate of 3.1 percent, the biggest drop since 1980, when the economy was in a deep recession.

Jobs are being cut all over the country, people are losing their homes to foreclosure and credit card debt is out of control. All told, many analysts are already declaring that the American economy is now officially in a recession.

According to figures provided by the Federal Reserve, consumers in this country have charged up $900 billion in credit card debt. The Associated Press reported in BusinessWeek this week that the Financial Services Roundtable, a financial industry alliance, and the Consumer Federation of America have joined forces in asking federal regulators to do something to reduce consumer credit card debt by as much as 40 percent.

Between credit card debt and a full-blown mortgage crisis on its hands, the Fed is less worried about inflation at this juncture and more focused on the reluctance of banks to loan money, according to the Times.

Whether this is the Fed’s last hurrah before a new administration takes office in January or not remains to be seen. Still, the next president is going to inherit many problems, and a glut of foreclosures appears to be one of them.

Potential homebuyers and real estate investors looking for bargain properties will probably have at least all of 2009 and maybe even 2010 to shop around. There is obviously more pain to come before we see daylight at the end of this tunnel.

What do you think about the Fed’s latest move? Will it make a difference where you live in terms of reducing foreclosure activity? We’d like to hear your opinion.

Three prominent California economists painted a rocky road ahead for the California housing market. Speaking at the California Association of Realtors convention in Long Beach, Calif., Nancy Dayton Sidhu, Stuart Gabriel and Richard K. Green said the nation — and California — are in a recession that could last until the end of 2009.

“We have a very severe credit crunch going on,” said Sidhu, vice president and senior economist at the Kyser Center for Economic Research. “About 85 percent of banks have tightened their lending standards. This is an issue. That’s where the problems are in the economy.”

Sidhu forecasted that the recession would last through 2009, followed by a moderate recovery thereafter and economic expansion by 2010 or 2011.

Gabriel, a professor of finance and director of the Richard S. Ziman Center for Real Estate at UCLA, predicted that “we’re not going to have a Great Depression, but we are going to have a recession. The labor market will contract, causing consumer spending to contract.”

Gabriel predicted that California will be the first to emerge from the economic downturn. “California will see the up turn in housing before any other state,” Gabriel said.

The federal government’s rescue efforts could ease the financial markets, making it easier for borrowers to find loans, according to Richard K. Green, director of the Lusk Center for Real Estate Development at the University of Southern California.

“Banks don’t trust each other right now,” said Green. “They just don’t know what’s on their balance sheets. But I’m still very bullish on California. I’m far more optimistic this week than last week.”

Will the housing sector lead the nation — and California — out of the recession? What are your thoughts?

Speaking before a packed house at the California Association of Realtors Expo 2008 in Long Beach, Calif., Wednesday, chief economist Leslie Appleton-Young seemed a bit uneasy as she delivered her 2009 California Housing Market Forecast.

“I bet everybody wants to know what’s going to happen next year. Me too!,” Appleton-Young told an anxious crowd of Realtors. “There are so many wild cards out there. It’s a full deck. They’re things we don’t have control over.”

Economics is not an exact science, so it is no surprise that practitioners will many times hedge their bet, and even revise their projections mid-year to stay in pace with changes as they occur. Many economists will even qualify their presentations by adding something like, “…unless some unknown monumental event occurs to change everything.”

Can you really blame them?

So far, 2008 has been the year of monumental events, beginning with the bailout of Bear Stearns, followed by the Lehman Bros. bankruptcy, Merrill Lynch selling to Bank of America, the federal government buying into the secondary market with the changes at Fannie Mae and Freddie Mac, and a number of banks either going out of business, or merging with other banks. Plus, let’s not forget a $700 billion stimulus package by the federal government aimed mostly at helping out troubled financial institutions to get banks lending money once again.

“It is really history in the making,” Appleton-Young said.

Given all those factors, and the uncertainty left in the marketplace, it was no doubt difficult to come up with a forecast for 2009, but Appleton-Young and her staff at CAR did a very admirable, and thorough, job of it. Based on the historic data she presented, it appears as if California is set to come out the other side in pretty good shape, probably by the second half of 2009 if no other major events change the nation’s — and the state’s — financial landscape.

The 2009 forecast calls for a further decline in home prices, down 6 percent for the year following a 32 percent decline this year. Existing home sales are projected to increase next year by 12.5 percent, a slight uptick from the 12 percent increase estimated for all of 2008, and a big improvement over the 26 percent decline seen in 2007, the market’s low point.

“Price behavior has been unprecedented,” Appleton-Young said. “Never before have we seen it go down so far so quickly. This is the third anniversary of seeing sales below where they were a year ago.”

In an interview with the Los Angeles Times, Appleton-Young noted that happy days were not here again for Realtors. Still, her prediction is overall upbeat, calling for the national economy to be at its weakest point during the next three quarters, with a turnaround during the second half of 2009.

Of particular interest to real estate investors is the high correlation between median prices and defaults. During her presentation, Appleton-Young noted that California currently has two distinct real estate markets — the REO market and the normal market. Because of that trend, it is a mistake to paint the state with a broad brush, she noted.

The median price discount was up in 2008, and so was the median number of weeks on the market. Correspondingly, net cash to sellers was down substantially, back to 2001 levels. As a result, she projected that the number of first-time home buyers entering the market will increase over the next couple of years, with everybody looking for a deal, along with favorable financing from FHA and the VA.

Even though she is projecting higher unemployment next year, Appleton-Young said she expects to see a lower number of foreclosures in California in 2009, although the number will still be significant.

The national economy in terms of Gross Domestic Product (GDP) will be weak (recession-like), with an improved outlook during the third and fourth quarters. And inflation will still be a problem.

The biggest market opportunities next year for real estate agents, Appleton-Young said, will be working with qualified first-time home buyers, and working DISTRESSED SALES, so long as they know the process and procedures involved.

What do you think? Are CAR’s projections too optimistic, too pessimistic, or just right?

The prognosis for the U.S. economy is not too rosy these days, so it comes as no surprise that some people are taking matters into their own hands and literally going to the extreme when faced with a foreclosure scenario.

This particular scenario could have played out in many parts of the country right now. In this case, it took place in Akron, Ohio.

It involves Addie Polk, a 90-year-old woman who took out a 30-year mortgage on her 101-year-old home from the Cuyahoga Falls office of Countrywide Home Loans in 2007. Her late husband and she bought the home in 1970.

Polk missed some payments, then Fannie Mae assumed the mortgage and filed for foreclosure. Sheriff’s deputies attempted to evict her 30 times before last week when she shot herself twice in the upper torso and was found bleeding to death by a neighbor who broke into the house after hearing loud noises inside, CNN reported.

Authorities who were on site attempting yet another eviction, found her car keys, pocketbook and life insurance policy laid out neatly so they could be found, suggesting she might have intended to commit suicide over losing the home.

Polk is expected to recover from her injuries. For its part, Fannie Mae decided to cancel the foreclosure proceedings, forgive the loan and let her keep the house after the community rallied around her.

Her Congressman, U.S. Rep. Dennis Kucinich, D-OH, relayed her story to the House of Representatives when debating President Bush’s $700 billion bailout bill last week. “This bill does nothing for the Addie Polks of the world,” CNN quoted him as saying.

Although we generally like to think that helping people in the various stages of foreclosure is a win-win situation for everyone involved, nobody really wins in this type of scenario.