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Forecast <br /> • Credit issues likely to mitigate in late 2008 and early 2009 <br /> — Year end balance sheet window dressing making liquidity <br /> temporarily worse <br /> — Sub-Prime mortgage problems to remain in 2008, but decline <br /> thereafter <br /> • Housing will be drag on local budgets, but not significant <br /> — Housing, like politics, is local—effect on budgets will vary based on: <br /> New construction levels <br /> • Reliance on development fees <br /> Property tax valuation&adjustments to existing housing/commercial stock <br /> i <br /> Public sector Advisors Springsted <br /> Forecast <br /> • Yield curve to "revert to mean" and become steeper <br /> — Lag time for short-term FOMC action will have an effect <br /> — Increased liquidity should reduce demand for short-term <br /> instruments <br /> • Interest rates likely to rise in later 2008, but not <br /> significantly <br /> — Additional demand may increase demand and long-term interest <br /> rates <br /> — Increasing global competition will help keep interest rate increase in <br /> check <br /> Springsted <br />