One of the more terrifying economic outlooks of the year

Writing at the indefatigable Zero Hedge, "Doctor Housing Bubble" authors one of the more terrifying economic readouts in recent history.

Of The 11 Million Mortgage Holders Underwater Backed By $2.9 Trillion In Mortgage Debt.

...29 percent of all mortgage debt ($2.9 trillion) is underwater. This is incredible given that the number of underwater mortgages amounts to 22 percent of all mortgages which tells us that there are some big loans skewing the figure here. In fact, we can see this when the numbers are broken down further...

...The above chart should give you a good understanding of why some states will have much tougher housing markets moving forward. It is incredible that 50 percent of all underwater mortgages in Nevada are underwater by at least 25 percent. In California that number is closer to 25 percent...

...California underwater mortgages: 1,724,774... California underwater mortgages -25% equity or more: 344,954.

We can almost guarantee that those 344,000 mortgages will default in the next year or two. The 1.7 million mortgages are also in this risky pool...

In California just by statistics you can say that every one out of three people that tell you they are a homeowner is likely underwater.  And every one out of five of those people is underwater by at least 25 percent.  We look at certain examples even in more select cities and we realize that this is happening all over the place... And what if home prices fall as we expect in the next year? 

The implications are ominous. As more homes foreclose, nearby properties suffer in value. Some cross the -25% negative equity threshold. And they foreclose... and on and on it goes.

And what happens when taxes increase -- across the board -- for Americans next year?

It's time to put the adults back in charge. November is coming.