Markets Tumble - You're Surprised?

Wall Street Heads for Lower Opening Mar 14th - 7:04am By TIM PARADIS AP Business Writer NEW YORK (AP) - U.S. stocks headed for a moderately lower opening Wednesday after concerns about faltering subprime mortgage lenders sparked a broad selloff in stocks Tuesday. (WTOP News)

It should really not come as a surprise to anyone that the market is dropping. Some key indicators:

1) Housing: Most houses, especially on the edges of metro areas were grossly overvalued. It should not take two full time jobs at more than $75K per person to be able to afford and keep a home functioning. This only made it harder for those that were not so well off to get a home which leads to indicator 2

2) Gas Prices: With gas at and above $2 and not really likely to ever decline lower, commuting costs are taking a larger bite out of everyone's wallet. Forget the myth of telecommuting - 90% of employers expect their employees to have a butt in the chair in some office park that is not colocated with anything that resembles a housing development. Just look at the Sterling/Dulles, corridor, Tysons Corner or the Reston office metroplex and tell me that you can easily access these areas without a car or by mass transit, which leads to 3.

3) Too much driving: Because of our wasteful land use planning, we have to drive everywhere, which consumes gas, adds to wear and tear on our vehicles and our families and makes us question whether or not we really need to make that trip to and get that . Leading to 4.

4) Increased retail vacancies: A quick look around any community and you will find a large number of strip malls with "lost our lease/going out of business" signs in the window (or just "for lease") while across the street a NEW strip mall is either being build or proposed. How many mini-malls do we really need? Overall, even in the major malls, there are a number of empty stores that do not look like anyone is coming to fill anytime soon. At best, one retailer is moving into a "better" or "cheaper" location within the same mall. Again, how many malls do we really need, and do we really need them so close together?

5) Inflation: The US economy has so far managed to avoid a return to the gross inflation of the 1970s. Already the price of foodstuffs is moving higher, primarily caused by the cost of transportation, but it is also being seen in the retail markets. There are fewer "bargains" to be had because the margins were too thin to begin with. Inflation is beginning to creep into the mainstream where its affects are felt by everyone.

I think that time is up and the business cycle is going to start a very serious downturn that could make the early 1930s look civilized. Whether you call it a recession or a correction or what it really is - people deciding that they cannot afford to eat, shelter and drive AND buy the flat screen TV, the consumer economy that has been such a powerful engine is about to come to a catastrophic halt.