Jul. 15--I don't have a crystal ball. I don't even have my old Magic 8 Ball, which got so depressed by forecasting Stockton's future it rolled away and joined a religious cult.

That said, I believed, based on the best information available, this grim recession was going to last until 2011. A pessimistic view two years ago, when I first timidly advanced it.

However, PMI Mortgage Insurance Company, a highly respected forecaster, just issued a quarterly report saying home prices in this metro area will be lower in 2012 than they are now.

Pause for a stiff shot of stoicism.

What this means for the city of Stockton is reduced property tax revenue. The city may have to revise revenue projections downward again, and cut accordingly.

As we all know, that means fewer services and civic improvements. As far as public employee unions are concerned, it means more drama than a Shakespeare festival.

Since the city's tentative deal with public safety unions just kicks the can down the road, tough but necessary choices will soon be critical again. Sigh.

In the private sector, the slump means -- well, you know. Been there, got the lower home values, retail closures, tight credit, salary cuts, layoffs, drop in business, general angst.

Why? Not to turn this into a business story, but according to an article in Tuesday's Wall Street Journal, a new wave of foreclosures is breaking upon America.

This isn't caused by subprime borrowers -- around here a seemingly endless crop of unlucky investors and doe-eyed magic thinkers. Most of them have defaulted.

The problem now: people with good credit who bought something called option adjustable rate mortgages.

These "pick a pay" deals allow borrowers to choose from a range of monthly payments. For instance, an option ARM deal might allow a partial interest payment. Or no interest payment at all. Any unpaid interest is added to the loan's balance, which causes the loan to grow.

Bad news. "On many such loans, balances have risen while values of the underlying properties have plummeted amid the housing crisis," the Journal writes.

Goldman Sachs predicted this back in 2007. I posted their remarkably prescient graph on my blog.

All this is just a financially literate run-up to the suggestion the recession is causing profound changes that may not be so temporary or cyclical.

Oh, sure, optimism is an American trait. But not a Valley trait. Besides, now there are millions of unemployed optimists. America's a big San Joaquin Valley now.

People with 10 toes over the edge tend to think things through.