Likely fallout? Well, HD is engaged in a massive stock buyback to lessen outside pressures. Will that be enough? If not, what’s next? Probably layoffs at Home Depot stores. Given consumer complaints about lack of service at Home Depots, though, the company could be putting itself in a vicious circle if it cuts too many employees.
And, there’s this:
And in yet one more sign of housing trouble, credit rating agency Standard & Poor’s said it's closely watching $12 billion in bonds backed by subprime mortgages, and could cut ratings because the agency does “not foresee the poor performance abating.”
In a published report on its Web site, S&P said the housing market is still struggling:
“We expect that the U.S. housing market, especially the subprime sector, will continue to decline before it improves, and home prices will continue to come under stress. Weakness in the property markets continues to exacerbate losses, with little prospect for improvement in the near term.
“Furthermore,” the report continued, “we expect losses will continue to increase, as borrowers experience rising loan payments due to the resetting terms of their adjustable-rate loans and principal amortization that occurs after the interest-only period ends for both adjustable-rate and fixed-rate loans.”
Where was S&P two years ago, though? Taking a Riviera vacation with Greenspan? Subprime defaults were already on the rise then.
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