It has been my position for a long time that the economy would tank led by ARM resets that will peak in the Spring of 2008. The consequences of the bad housing are failed financial instruments such as MBSs and CDOs. Because it takes time to turn a failed ARM reset into a forecloure, I have been calling this:
The Crisis in the Summer of 2008.
ISM: Service Sector Contracts Sharply
From the WSJ: Service-Sector Activity Contracts
Service sector activity contracted sharply in January for the first time since March 2003.
... the Institute for Supply Management reported that its January nonmanufacturing index moved to a reading of 41.9, from December's 54.4.
...The report showed still problematic inflationary pressures in the non-manufacturing sector, with the prices index at 70.7, from the prior month's 71.5.
The employment index for January came in at 43.9, from December's 51.8.
The report also said that the non-manufacturing new orders index stood at 43.5. It was 53.9 in December.
It couldn't be much worse.
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The Crisis in the Summer of 2008 maybe starting a little early.
