[semantic]

It seems like things are really starting to accelerate - the S&P is down almost 3.5%. Did you see Denninger's latest post? Here's a good snippet:

The combined percent of loans past due and in foreclosure jumped to a seasonally adjusted 11.18%, the highest since the MBA began keeping records in 1972. Normal default rates for prime mortgage paper is well under 1%, even in difficult economic times. So how did we wind up with a failure rate of ten times the norm spread across the entirety of all outstanding mortgages?

Remember, this is far worse than it looks. The median "holding time" for a home loan is around 7 years, so this means that about half of the mortgages written were done before the boom occurred; those are presumed safe, as there is sufficient equity that even if you lost your job you can sell for more than the outstanding balance on the note. So this means that approximately one in five mortgages written in the last seven years are either not being paid or in foreclosure.

ONE IN FIVE! With 1 out of 5 notes going back and average recovery (per HUD) being around 50 cents at best, you're talking about losses of ten percent of the total amount financed over the last seven years!

These are absolutely colossal numbers and there is no possible way for the government to backstop or "print" its way out of it. It cannot be done and if our government doesn't cut their crap out the market, which has sussed out the truth, is going to continue to pummel everyone who has any sort of debt, presuming that all debt was underwritten with similarly crappy documentation and performance characteristics.

Market Ticker

[Oatka]

It seems like things are really starting to accelerate

Indeed. This 5-day chart was taken at 8 a.m. PST and the market is looking EXTREMELY weak. I say that because when the market gaps, in this case down, it usually goes back up to "fill in the blanks" and then rolls over and continues down. In this case it never made it that far and then gapped down again this morning. Once it breaks that line at about 6700, we've got more free-falling to do.

To get an idea of how far we may go, pick your own level of support from this long-term chart. Anybody who is trying to ride this market out is committing financial suicide.

(That '65-'82 support is at 1000 - ridiculous to think that low but once panic sets it it always overdoes it. At that level, if I have any money left, After Obama, even I would get back in. :-) )