Mark Dotzour is one of my favorite speakers. He makes things easy to understand and is funny. Below is a snippet from one of his recent speeches.
COLLEGE STATION (Real Estate Center) – Speaking before the Houston Economic Club earlier today, Dr. Mark Dotzour discussed the state of the national and Texas economies, and made a few predictions.
Credit markets are still in “considerable disarray,” with the value of questionable mortgages still declining, said Dotzour, chief economist for the Real Estate Center at Texas A&M University.
More bad news regarding poorly performing mortgages is on the way from the banking system. Dotzour said the news may be disclosed by Feb. 15, when auditors ratify year-end financial statements.
“The international credit turmoil has led global investors to run to the political safety of U.S. Treasury securities, driving down the yield of ten-year treasuries and residential mortgages that are priced on the ten-year,” he said.
Dotzour predicts substantial layoffs on Wall Street in the coming weeks.
The underlying national economy is strong and resilient, he says, but it has weaknesses that could cause severe damage.
“The U.S. economy is like a professional wrestler with blood clots in his circulatory system,” Dotzour said. “The body is strong, fit and competitive, but nobody knows how many clots are in the system or where they could land. All we know is that when they do land, the damage will be significant.”
The U.S. economy, with its weaknesses largely centered around the auto industry and construction, is being outperformed by the Texas economy.
“Our construction industry is still pretty strong by comparison, and we don’t have much exposure to the car business,” Dotzour said.