THE TRUTH BEHIND THE MYTH

Holy Grail Batman!

Pace of CASH OUT REFI's has NOT slowed! "Only 9 percent of refinancings resulted in lower loan amounts." ( I have always felt that HAD the refi boom LOWERED debt or helped to pay it off faster like a switch to 15 from 30 yr, DOWN the road we would have a BOOM like no other based on increased savings and ability to spend because of lower debt!, THIS didn't happen!)

"Now they refinance to put cash in their pockets or to pay for big purchases. " "Americans paid out $133 billion for home improvements in the 12 months ended June 30. "

Mortgage applications drop slightly

OIL prices set record again nearing $63 !! above $63 a break out could occur.

Toyota profit slips, but outlook solid
Surprise 9.7% fall in profit due to increased spending; another year of brisk sales seen.

We are in the midst of a VERY DANGEROUS climate! Housing inventories are rising as we reach 70% Home Ownership rate and one of the lowest NON OWNERSHIP rates ever. As yield curve flattens, as SHORT TERM rates are rising!!!!

Housing affordability is FALLING. RISING short term rates are being ignored, yield curve is being ignored, satiated housing AND AUTO market are being ignored.

WE have BURNED UP future demand, we are already at historic extremes.

FED policies have ignited the economy instead of letting it heal after last collapse, replaced it with an even larger imbalance!

Cyclical Bull is still in tact, but has gone nowhere since 2004, momo is slowing, but not bullishness.

FED policies have IGNITED SPECULATION a precursor to THE FALL!

WHat will ignite the decline? when will it come? this far into the cycle we are certainly closer to rough times than at the beginning of economic expansion.

Housing touches all phases of our economic lives, it is THE driver of the economy and we are near SATIATED in our demand.

WE have used HOME EQUITY to FUEL CONSUMPTION, not lower debt, we have sent debt to historic extremes.

This is a very dangerous cocktail, and I do fear the hangover is going to be ugly. Timing aside, all bubbles end the same way....history tells us that.

Sound economies don't sustain themselves from one asset inflator to another.

This echo rebound is about to contract.

Duratek