All is not right with the world. Today’s news and market results lend more support to the notion that credit turmoils will worsen, housing will continue to slump, and stock prices will continue to slide. Some notable headlines:

• Countrywide plans to cut 12,000 more jobs ~ 20% of its workforce
  • 2008 loan origination estimates are 25% lower than this year
• Non-farm payrolls decline by 4,000 in August with drops in construction and manufacturing – first drop in four years!
  • Suggests housing recession is starting to influence broader economy
  • This also lends support to a potential Fed rate cut in its policy meeting on September 18th

A drastic rate cut is the big variable. It’s effects will surely stem the credit slide, providing increased liquidity, but it is uncertain whether this will be sufficient to turn the business cycle. I continue to advocate defensive positions.

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