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What will steady shaky financial system?

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A sure indicator, Mr. Horrigan says, will be when "vultures" – aggressive, bottom-fishing investors – start moving in to buy investments that have tanked in the hands of others. In the current crisis, those investments include packages of debt that include subprime mortgages.

"That's how crises come to an end," Horrigan says. "Someone starts buying."

This is why home prices are so important. Buying of homes or of mortgage securities can best rebound on confidence that prices are near a bottom.

"The [economic] downturn was triggered by the bursting of a housing bubble," says Jared Bernstein, an economist at the Economic Policy Institute, a left-leaning Washington think tank. "As long as home prices have a way to go, it's hard to see much light at the end of the tunnel."

He cites a forecast of home prices shared by a number of analysts: "Home prices are down 10 percent, and probably have another 10 percent to go. By that very simple measure, you could argue we are halfway through the tunnel."

A key question is if policy intervention will hasten the process – or prolong it.

The argument for intervention is that the market is in such chaos now that home prices could fall too far. A wave of foreclosures is adding to an already large inventory of homes for sale. And in a vicious cycle, the further home prices fall, the more people may default on their loans.

Some analysts say the end of the crisis will be near when Congress takes some new action to stem the foreclosure tide. This could be structured, supporters say, so that it is not a bailout for lenders or borrowers – and so that it allows home prices to fall to a new equilibrium.

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