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« Retail Sales Weak, But Towel Not Being Thrown In | Main | Recession? Different Method, Same Answer »

August 15, 2008


Laurence Hunt


Any indicators that this might just be the early stages of something bigger?

I'm thinking of fundamental factors like inflation, debt service demands, marginal cash flow, unresolved credit defaults, etc.

I think your viewpoint is very independent, as you don't have an axe to grind, so your ideas are very fresh and interesting.

However, based on my own sources, I'm expecting a long and ugly recession at this point.

Laurence Hunt

At the risk of dominating your feedback section, here is a single example of the kind of information I am basing my decision-making on, from Colorado Springs (from a reader on Bill Fleckenstein's website):

"Here's another data point for you from a mid-size city. Here in Colorado Springs the sales tax is down 8% in July from a year ago, and city officials are considering layoffs, furloughs, program cuts, and facility closings to combat the shortfall. The drop in sales tax was led by a 32.5% drop in collections by building material merchants and 16.3% from auto dealers. Housing construction for the first seven months is down 42% from a year ago.

"While home prices climbed in the late 90s into 2002, this wasn't a bubble region, compared to others, over the past several years. So now we'll see even the areas that weren't involved in the mania begin to get hurt as the recession metastasizes.

"The Option Arm resets aren't scheduled to peak until 2011, unless they hit the negative amortization trigger and recast before then. I don't know what these experts who are calling for a bottom in housing or the market are smoking, but I have a clue."

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